Question
Question 4: Cost-volume-profit analysis 25 MARKS a. At a recent board meeting, the CFO of Auckland Corporation has presented the following contribution format income statement
Question 4: Cost-volume-profit analysis 25 MARKS a. At a recent board meeting, the CFO of Auckland Corporation has presented the following contribution format income statement for April.
Sales (units) | 50,000 |
Sales (dollar) | $450,600 |
Variable expenses | $250,600 |
Contribution margin | $200,000 |
Fixed expenses | $97,000 |
Net operating income | $103,000 |
During the board meeting, the CFO also presented information about the companys break-even point (in terms of units) and margin of safety (in terms of dollar sales). However, the General Manager (Operations) could not attend the meeting because she was in another important meeting with suppliers. The next day, the General Manager (Operations) requested the CFO to provide her a brief update about yesterdays board meeting. Imagine yourself as the CFO and write down your responses to the General Manager (Operations) regarding what was the companys break-even point (units) and margin of safety (dollar sales) and what do these numbers mean for the company? [Maximum word limit: 390 words, including both text and numbers]
(13 marks)
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