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Transcription of this question: 2.Bip Bip (BB)Nicolås and Loura want to start up a vehicle rental business in Punta del Este, a seaside resort inthe Southern Hemisphere. The business will operate as a partnership and be called Bip Bip (BB).Tourist numbers are very high during the summer (December to February months in the SouthernHemisphere); the beach and water sports attract many tourists. BB will rent out convertible cars,electric cars and minivans. BB will purchase these vehicles through a leasing scheme.”Because most rental income will occur in a few months of the year, we must forecast our cashposition during the slow months and we must follow a budget,” says Loura. She has forecastedthe following figures for the first six months of operation, beginning in December 2015.All revenues received and costs paid will be in cash. All cash sales are paid at the time of thevehicle rental.Monthly revenue from rentals: December 2015 toFebruary 2016Monthly revenue from rentals: March to May 2016Monthly overheads starting in December 2015Leasing fee for all vehicles, payable by BB everyother month starting in December 2015Monthly variable costs: December 2015 toFebruary 2016Monthly variable costs: March to May 2016Opening balance in December 201511 00010002000500015003001000Due to the increasing importance of e-commerce, BB would like to offer an online booking servicein addition to their website. Nicolas believes that an online booking service will allow BBto reacha wider national and international market, and will also reduce marketing costs. However, Louraargued that e-commerce also has some limitations.After further discussion, Nicolås and Loura decided not to set up an online booking service.However, after May 2016, they will examine the budget and variances with care to determine if BBshould offer an online booking service the following year.(Question 2 continued)(a)(b)(d)Describe one reason why customers might be reluctant to use an online bookingservice (e-commerce).Identify two features of a partnership.(i)(iii)Prepare a monthly cash-flow forecast, for BB, for the first six months of operation.Explain BBs forecasted cash-flow position.Calculate the forecasted net profit, without any depreciation, for the firstsix months of operation (show all your working).In June 2016 BB discovered that some of their forecasts had been inaccurate.For December 2015, and January and February 2016, variable costs had been 10%lower than forecasted.(i)Calculate the impact of lower variable costs on BB’s closing cash balance, at theend of February 2016 (show all your working).For March, April and May 2016, revenue was 10% higher.Calculate the impact of lower variable costs and higher revenue on BB’s closingcash balance, at the end of May 2016 (show all your working).[2][2][2][2][2](e) Analyse the role of budgets and variances, in strategic planning, for businessessuch as BB.

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