7/28/2019 BUSS1q Exam Practise
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BUSS1 Examination Question Practise
The Local Shop
Chewton Stores is the idea of Stacey and her brother Nick. They
feel that Chewton, the Cornish village in which theylive, would
benefit from a local independent shop. The village is 15 miles from
the nearest town and supermarket andthere are several smaller
villages surrounding Chewton without a local shop. It would sell a
range of grocery itemsincluding fruit and vegetables, a deli
counter, hot pies and pasties together with made to order
sandwiches. ChewtonStores would also stock a range of magazines and
newspapers and offer a dry cleaning service. There is a
vacantproperty that could be converted into a retail outlet. Stacey
and Nick have undertaken both primary and secondaryresearch and
have estimated that, being open seven days a week from 7am to 7pm,
they would get 3 000 customersin April (their first month of
trading), which would increase by 20% in May. They also found out
that the UK grocerymarket was worth 128 billion in 2008.
From the research the financial forecasts are:-
Item Forecast Revenue/Costs
Fixed cost of rent 1 640 a monthOther fixed costs 750 each
quarter (divided equally over the 3 months)Variable cost stock
Average 1 950 a month
Other variable costs Average of 2.50 per customerAverage spend
per customer 4.50
Following advice from their bank manager Stacey and Nick
completed income and expenditure budgets for the firsttwo months of
trading:-
Chewton Stores Budgets April (000s) May (000s)
Income 13.5 (c)
Expenditure: rent & other fixed costs 1.89 1.89
Expenditure stock 1.95 1.95
Expenditure other variable costs (a) 9
Profit/(loss) budget (b) (d)
1 If the annual growth in the UK grocery market was 5% per annum
calculate the value of the UK grocerymarket at the end of 2010.
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(4 marks)
2 Using the figures for April calculate the monthly break-even
quantity for Chewton Stores.
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(5 marks)
3 Calculate the missing figures in the Chewton Stores budgets
for April and May.
(a)
______________________________________________________________________
(2 marks)(b)
______________________________________________________________________
(2 marks)(c)
______________________________________________________________________
(2 marks)(d)
______________________________________________________________________
(2 marks)
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4 Following some further market research Stacey and Nick changed
their forecast for customer numbers toremain at the April figure of
3 000 for each month during their first trading year. Using this
revised forecastcalculate the expected profit from Chewton Stores
first year of trading.
________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
(5 marks)
5 When Stacey and Nick commenced trading they realised that the
figure for the variable cost of stock was toolow, they increased
this to 2 500 in their June budget. Complete their June budget.
(2 marks per figure - 10 marks in total)
Chewton Stores Budgets June (000s)
Income
Expenditure: rent & other fixed costs
Expenditure stock
Expenditure other variable costs
Profit/(loss) budget
Total / 32
