Page 9 - CIMA OCS Workbook February 2019 - Day 2 Tasks

MANAGEMENT ACCOUNTING (P1) - PRACTICE TASKS

EXERCISE 2 (DECISION MAKING)

UPDATE

Next week the Trigg Adventure Board and other senior managers will be discussing results to
date, the budget for 2019 and whether or not changes are required to the product portfolio going
forwards.

TRIGGER
This morning you received the following email from Sally Gomez:

To: You
From: Sally Gomez (Sales Director)
Subject: Favour

Hi

In preparation for a Board meeting next week I asked Ping Bennett, the Finance Director, for her
thoughts on our product portfolio and she sent me a chart and some notes [See reference
materials below]. Unfortunately she is now on holiday and I must confess that I am not sure
what she is talking about. However, from what I can tell, it looks like it could be quite useful for
discussions with the Board. Normally I talk to Freddie Williams if I get stuck on something like
this but he is tied up with auditors today and suggested I speak to you.

Ping suggested that:

• “we were over-reliant on domestic sales”
• “our safety margin was only 28%”
• “it was vital that we try to boost commercial sales”.

As stated above, while I agree with her comments, I cannot see how she made these conclusions
from her analysis.

Please send me an email which explains the following:

• What the points A, B, C and D represent and the difference between the two lines shown
on the chart. As part of this can you explain what is meant by “C/S ratio” and “safety
margin”
• The usefulness of this chart to us
• Whether Ping’s comments can be deduced from the chart.

Many thanks
Sally

TASK

Respond to Sally Gomez’s email.
Time allowed (40 Minutes)

KAPLAN PUBLISHING 31