Auto manufacturers are keen to report their production and sales figures. This may be to assess market share or the data may be considered a key performance indicator given the high fixed costs an auto manufacturer may have to cover. Take Mazda for example. On their website (www.mazda.com) there are regular news releases providing investors with data on sales and production volumes by month and quarter, alongside the previous year data for comparison. Other auto companies like Ford, Honda and BMW also publish similar data.

Looking at the financial statements of Mazda for the year ended 31 March, 2010, the company made a gross profit of approximately \($4.9\) billion and an operating (net) profit before interest and tax of \($100\) million. From the press release section of Mazda’s website, we can see the number of vehicles produced during the 2010 financial year was 1.14 million, the vast majority of which were passenger cars. Like other auto manufacturers, Mazda too has suffered due to the economic downturn, returning from a loss situation in 2009. The 2010 Annual Report (pp. 11–12) comments on efforts to decrease fixed costs through measures such as more effective advertising, less business travel and reduced executive compensation. Variable costs were also reduced by eliminating waste.
Questions
1 Do you think a profit–volume graph presentation of the relationships between costs volume and profits may be more useful than the typical breakeven-chart to auto manufacturers like Mazda?
2 Could you draw a rough profit–volume chart from the above data?