Sales revenue Cost of sales Gross Profit 450,000 (220,000) 230,000 Selling expenses General expenses Depreciation Salaries and wages Operating Profit (60,000) (24,000) (14,000) (15,000) 117,000 Management of Walkout Ltd is looking to gather insights into their operating leverage and the effect of changes in the volume of their output on profitability. a) Indicate which of the following statements is most correct by placing the number in the marked square -> 1 Cost-Volume-Profit analysis is only useful for company managers and strategic planning Cost-Volume-Profit provides more detailed information when used at the product rather than company level of analysis Cost-Volume-Profit analysis is useful for understanding the possible ranges of selling price given other constraints or assumptions As Cost-Volume-Profit analysis takes account of both variable and fixed costs, it is always likely to perfectly mirror the cost-structure of the business 1 and 3 2, 3, and 4 1, 2, 3 and 4 6 7 b) Indicate which of the following statements is most correct by placing the number in the marked square -> 2 In general, cost of sales can only include variable costs In general, the cost of sales always includes fixed and variable costs In general, the cost of sales only includes fixed costs In general, the cost of sales can include both fixed and variable costs 4