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Economics

Hand out: Thursday, June 26th 2014


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Economics

3 hour written exam




This assignment outline consists of three sub assignments which will be
included in the evaluation of the overall evaluation with the following
weighting:
Assignment 1: 25 %

Assignment 2: 15 %

Assignment 3: 30 %

Assignment 4: 30 %








The assignments are coherent; however, they can be solved independently of
each other.
All written tools are allowed at the exam.

The assignments must be solved with reference to the exam regulations, cf.
announcement No. 714 of June 27, 2012.


Economics




Hand out: Thursday, June 26th 2014
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Bellevue A/S
In 2007 Bellevue A/S launched their first experience-boxes in retail stores
around Denmark and the company has experienced a positive development
ever since. Today there are around 50 employees and most of them are
working from the head office in Aalborg.

Problem 1 (25%)
Bellevue A/S has experienced great success in the sales of brunch-packages
but they would like to have more detailed information about the revenue and
costs of this product. In 2013 Bellevue A/S sold 50.000 brunch-packages at
total revenue of 15,000,000 DKK. The fixed costs were 4,000,000 DKK and the
contribution margin ratio was 35%.

1.1: Calculate the contribution margin

1.2: Calculate the variable costs and variable cost per unit

1.3: Calculate break-even revenue and break-even sales

Problem 2 (15%)

Bellevue A/S has recently invested in new computers and cell phones to all of
the sales personnel. The total purchase price was 320,000 DKK. The expected
life time is 5 years and the scrap value is 10% of the purchase price.

2.1: Set up a depreciation plan using the linear method

Economics




Hand out: Thursday, June 26th 2014
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Problem 3 (30%)

P&L statement in 1,000
DKK
2012 2011 2010 2009 2008
Revenue 122,650 105,560 70,420 55,401 46,032
- Cost of sales 92,273 79,856 54,050 41,915 35,378
= Contribution margin 30,377 25,704 16,370 13,486 10,654
- Employee cost 21,940 18,492 11,120 10,403 9,211
- Depreciations 2,136 1,928 1,583 1,060 800
= Result before interest 6,301 5,284 3,667 2,023 643
+ Financial income 355 103 351 20 10
- Financial costs 2,385 1,868 1,290 910 936
= Ordinary profit before tax 4,271 3,519 2,728 1,133 -283
- Tax 1,068 880 682 283 -71
= Result of the year 3,203 2,639 2,046 850 -212


Extracts from the balance
sheet, in 1,000 DKK
2012 2011 2010 2009 2008
Fixed assets 12,105 11,825 9,413 8,835 8,648
Current assets 53,184 43,407 32,744 25,552 18,165
Equity 15,142 14,689 12,255 10,034 3,434
Debt 50,147 40,543 29,902 24,353 23,379

3.1: Make a financial analysis of the profitability and solvency

3.2: Comment on the results and explain how the company has
developed.

Problem 4 (30%)

Bellevue A/S has recently launched a new product mountain bike tours to
Rold Skov. It has been decided that 3 instructors will attend each tour no
matter how many participants will attend on each tour. The total salary for the
3 instructors is 2,500 DKK per tour (fixed cost). A maximum of 24 participants
(excl. instructors) can participate on each tour because the supplier of the
mountain bikes only has a limited number of bikes.

Below you will find the variable unit costs:


Economics




Hand out: Thursday, June 26th 2014
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Cost per participant DKK
Rent of mountain bike 100
Rent of helmet and gloves 25
Lunch 30
Total 155

If there are 16 or more participants on a tour, the rent per mountain bike will
decrease by 20% for all the rented mountain bikes.


Bellevue A/S expects the following connection between price and sales:

Sales price Number of participants
550 4
500 8
450 12
400 16
350 20
300 24

4.1: Calculate the optimal sales price by using the differential method.

4.2: Calculate contribution margin and result before interest.

To promote the mountain bike tours even more, Bellevue A/S would like to
make a 2-week campaign with very attractive sales prices.

4.3: What would the minimum sales price be during the campaign
period? Give reasons for your answer.

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