Page 1 of 8 IB3130 UNIVERSITY OF WARWICK Department Warwick Business School Level 3 Module Code IB3130 Module Title Business Studies I Exam Paper Code MOCK EXAM Exam Paper Title IB3130 Business Studies I MOCK EXAM Duration 1.5 hours Exam Paper Type 24-hour window – Open Book STUDENT INSTRUCTIONS 1. Read all instructions carefully. We recommend you read through the entire paper at least once before writing. 2. There are 8 questions. All candidates must answer TWO questions from the selection of questions. All candidates must answer questions in subjects of which you have NOT previously submitted an assignment. Only ONE question from each subject may be answered. 3. You should not submit answers to more than the required number of questions. 4. All questions carry the same number of marks unless otherwise stated. 5. Where handwritten answers are permitted, please ensure you write legibly, preferably in dark blue or black ink. If you use a pencil, please ensure it is not too faint to be captured by scan or photograph. It is your responsibility to ensure your work can be read. 6. If uploading photographs or scanned copies of your work, please check for legibility before uploading. It is your responsibility to ensure your work can be read. 7. Add your student number to all uploaded files. 8. You are permitted to access module materials, notes, resources, references and the internet during the online assessment. Page 2 of 8 IB3130 9. You must not communicate with any other candidate during the assessment period, unless instructed to do so as part of the assessment requirement(s). 10. By starting this assessment, you are declaring yourself fit to undertake it. You are expected to make a reasonable attempt at the assessment by answering the questions in the paper. IMPORTANT INFORMATION  We strongly recommend you use Google Chrome or Mozilla Firefox to access the Alternative Exams Portal  You must have completed and uploaded the assessment before the 24-hour assessment window closes  You are granted an additional 45 minutes beyond the stated duration (1.5 hours) of this assessment to allow for downloading/uploading your assessment, your files and any technical delays  Late submissions are not accepted. Once started, you must complete the assessment within 1.5 hours (+45 minutes upload/download time)  If you are unable to submit your assessment, you can record Mitigating Circumstances and the Board of Examiners will consider your case  Students with approved Alternative Exam Arrangements (Reasonable Adjustments) that permit extra time and/or rest breaks will have this time added on to the stated duration SUPPORT DURING THE ASSESSMENT Operational Support  Use the Alternative Exams Portal to seek advice immediately if during the assessment period: o you cannot access the online assessment o you believe you have been given access to the wrong online assessment Operational support will be available between 09:00 and 17:00 GMT for each examination (excluding Sunday) Technical Support  If you experience any technical difficulties with the Alternative Exam Portal please contact helpdesk@warwick.ac.uk Page 3 of 8 IB3130  If you experience technical difficulties with Moodle please contact moodle@warwick.ac.uk  If you experience technical difficulties with Questionmark Perception (QMP) please contact eassessment@warwick.ac.uk  If you experience technical difficulties with myWBS, please contact exams@wbs.ac.uk Technical support will be available between 09:00 and 17:00 GMT for each examination (excluding Sunday) Academic Support  If you have an academic query, contact the invigilator (using the ‘Contact an Invigilator’ tool in AEP) to raise your issue. Please be aware that two-way communication in AEP is not currently possible Academic support will normally be provided for the duration of the examination (i.e. for a 2 hour (+45 min) exam starting at 09:00 GMT, academic support will normally be provided between 09:00 and 11:45 GMT). Academic support beyond this time is at the discretion of the department. Other Support  Write to your department immediately if you cannot complete your assessment for the following reasons: o you lose your internet connection o your device fails o you become unwell and are unable to continue o you are affected by circumstances beyond your control Your assessment starts below. Page 4 of 8 IB3130 ACCOUNTING [Question 1] You are a management accountant for Hope Limited, a newly established company. You have recently negotiated with a manufacturer of a single product which you intend to sell to customers. As a first step, you have gathered information for the product for the first month. Some of the information is as follows: The sales price per unit of the product is £240. At this price, the budgeted sales volume in the month will be 2,200 units. The variable costs per unit of product to be sold are royalty paid to the manufacturer £112, packaging £12 and selling £20. The monthly fixed expenses are building rental £8,000; equipment depreciation £6,000; administrative £30,000 and other fixed expenses £4,000. The company has decided that it must earn profits of at least £168,000 each month to enable it to expand its business in future. In the event that the target profit is more than the budgeted profit, the company intends to invest an additional £8,000 fixed expense per month which will enable the company to employ additional part time employees, pay for an intense sales effort and a creative advertising programme. You believe that the change would bring in an additional £50,000 in sales each month. Required: (a) For the first month: i) Calculate the contribution per unit and contribution sales ratio. How many units must be sold to break-even? What does this represent in total pound sterling sales? ii) How much will be the margin of safety as a percentage (to one decimal place) of budgeted sales volume? iii) How much will be the budgeted profit? iv) How many sales units are required to achieve the targeted profit of £168,000? v) Should the additional fixed expense of £8,000 be spent to generate an extra £50,000 in order to meet the target profit of £168,000? (50 marks) (b) Briefly explain the assumptions and limitations in break-even analysis. (50 marks) (Total 100 marks) (Continued…/) Page 5 of 8 IB3130 Or [Question 2] The following are draft financial statements for Alexa Plc. Statements of financial position as at 31 December…………… 2017 2018 £’000 £’000 £’000 £’000 Assets Non-current assets Freehold factory 8,800 nil Plant 10,000 15,000 ––––– –––––– 18,800 15,000 Current assets Inventory 4,000 7,200 Trade receivables 4,800 7,400 Bank 1,200 10,000 nil 14,600 ––––– –––––– –––– –––––– Total assets 28,800 29,600 –––––– –––––– Equity and liabilities Equity shares of £1 each 4,000 4,000 Retained earnings 7,000 1,600 ––––– ––––– 11,000 5,600 Non-current liabilities Loan 9,600 12,600 Current liabilities Bank overdraft nil 2,400 Trade payables 6,200 7,600 Taxation 2,000 8,200 1,400 11,400 ––––– ––––– ––––– –––––– Total equity and liabilities 28,800 29,600 ––––– –––––– (Question 2 continues…/) Page 6 of 8 IB3130 [Question 2, continued] Income statements for the year ended 31 December……………… 2017 2018 £’000 £’000 Revenue 24,000 41,000 Cost of sales (21,000) (36,000) –––––––– –––––––– Gross profit 3,000 5,000 Operating expenses (480) (1,000) Finance costs (420) (1,200) –––––––– –––––––– Profit before tax 2,100 2,800 Income tax expense (300) (800) –––––––– –––––––– Profit for the year 1,800 2,000 –––––––– –––––––– Dividends paid during the year 500 1,400 –––––––– –––––––– The following ratios have been calculated for 2017 and can be taken to be correct: Return on year end capital employed (ROCE) 12.2% Pre-tax return on equity (ROE) 19.1% Net asset (total assets less current liabilities) turnover 1.2 times Gross profit margin 12.5% Operating expenses to sales ratio 2.0% Operating profit margin 10.5% Current ratio 1.2 Quick ratio 0.7 Closing inventory holding period 70 days Trade receivables’ collection period 73 days Trade payables’ payment period (using cost of sales) 108 days Gearing 47% Interest cover 6 times Dividend cover 3.6 times EPS 45p Required: (a) Calculate for 2018 the ratios equivalent to all those given for 2017 above. (45 marks) (b) Assess the relative performance and financial position of Alexa Plc for the year ended 31 December 2018. (40 marks) (c) Explain the limitations of ratio analysis. (15 marks) (Total 100 marks) (Continued…/) Page 7 of 8 IB3130 MARKETING [Question 3] Discuss why and how an in-depth knowledge of consumer buyer behaviour may be helpful as well as a potential hindrance to a firm which is developing an innovative new product that it seeks to introduce into a competitive market. Draw upon consumer buyer behaviour concepts and/or processes and illustrate with example(s) as appropriate. (100 marks) Or [Question 4] You attend a job interview at a small 30 year-old firm that makes precision weighing scales and you are told by the interviewer that their organisation is sceptical of marketing because it is basically just “advertising and selling.” How would you respond? (100 marks) BUSINESS STRATEGY [Question 5] Using appropriate strategy literature and examples, critically discuss the following statement: “The goal of the business firm is to maximise shareholder value”. (100 marks) Or [Question 6] A large, established firm has decided to enter a new industry where it has not done business before. How should this firm choose its generic strategy in this new industry? What considerations are involved? (100 marks) (Continued…/) Page 8 of 8 IB3130 ORGANISATIONAL BEHAVIOR [Question 7] What are the advantages and disadvantages of extrinsic rewards for motivating business professionals (e.g., managers, business school graduates and financial industry employees)? In support of your views, draw upon relevant organisational behaviour concepts and illustrate with examples as appropriate. (100 marks) Or [Question 8] Critically discuss the role of leadership in changing organisational culture. In support of your views, draw upon relevant organisational behaviour concepts and illustrate with examples as appropriate. (100 marks) End of Paper






















































































































































































































































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