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Business Analysis Questions on Costing, Correlation, and Software Programs

## Question 1

Peter, Operations manager of Borehamwood Farms Limited (BF Ltd) lacks strong insight in both economics and mathematical knowledge for any realistic business decision-making. However, Peter has been able to use the cost diagram below to illustrate and influence costing decisions in the company, BF Ltd:

The company BF Ltd has the following records for its product:

Budgeted annual output is 120000 units; fixed cost amount to Â£40,000; variable cost is Â£0.50 per unit and the sales price is Â£1.00 per unit.

a)Develop a mathematical model using the cost information above.

b)Calculate the profit or loss for BF Ltd using the above information.Â

c)Draw a graph with a spreadsheet, for a five-year projection from January 2021 and factor in an annual expected increase of 10 % in variable and 5% increase on both the sales quantity and price (N.B, the changes takes effect from January 2021). Critically analyse and comment on the costing behaviour for the projections for total revenue and total cost relationship.Â

The figures below represent forecast expenditure for advertising and expected sales revenue of footwear designer company, Summer Land Limited:

 Year Advertising expenditure (X) Sales revenue (Y) Â (Â£000s) (Â£000S) 2021 2 60 2022 5 100 2013 4 70 2024 6 90 2025 3 80

Assuming you are a newly employed graduate business analyst, you are required to:Â

b)Plot a scatter diagram of the data and discuss the pattern of the relationship of the variables.Â  Â  Â  Â

Critically analyse the impact of advertising expenditure on sales and advise the marketing manager on how the company can gain a competitive advantage in the footwear industry by adopting other relevant marketing tactic

BAX Plc. produces and sells a specialised computer software programs. Estimated unit data for next year are as follows:

 Per unit Â£ Â£ Selling price Â 600 Variable costs: Â Â Labour 200 Â Materials Â Â 40 Â Variable overheads. Â Â 10 250 Profit Â 350

Anticipated fixed costs for the year are Â£80,000 for administration and Â£60000 for selling and distribution. Estimated sales for the year are 640 computer soft wares.

a)Determine.

i)Breakeven point in terms of number of software programs sold.Â Â

ii)The margin of safety as a percentage of estimated sales.Â

b)The companyâ€™s target profit for the year is Â£56000.Â

i) Discuss whether the estimated sales volume will be sufficient to achieve this target.Â

ii) Evaluate the estimated sales volume that will neither cause profit to exceed nor fall short of the target profit.Â

c)Prepare a breakeven chart for BAX Plc, showing clearly, the breakeven point, and the margin of safetyÂ

(e) Critically analyse the benefits and limitations of the breakeven model, its application in marginal costing and as a business strategy for BAX Plc.Â

As part of an interview for a position as a Graduate Business Analysts at KADLex Plc, you are required to demonstrate your research and business analytical skills. As a result, you are tasked to:Â

Â A.Â (i) Research the monthly digest of statistics or the national statistical archives for any two economic variables which you think may be correlated (e.g. retail price index/employment, inflation/money supply, GDP/employment etc.) andÂ

(ii) Critically analyse and present your results in writing to the interview panel.Â

Bear in mind the dangers of spurious correlation and seeking other factors which may be influencing your data, including outliers. Interpretation may be simpler if you select cross sectional data taken at the same point in time (e.g. regional figures) rather than longitudinal data taken over a ten-year period

B.From the company website, Mrs. Smart the Chief Business Analyst, has stated â€œusing insights gained from our intuitive tools like Search Engine Optimisation (SEO), we adjust our approach alongside continued analysis of your market, competitors, and customers. This means you are always ahead of industry changesâ€Â

Critically analyse how SEO can be used to the advantage of KADlex in the European Marketing industry.