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Read the case let carefully and answer the question that follow

The big and colourful company

You are running ‘big and colourful (B & C)’ company that sells books to customers through three retail formats.

(i). You can buy books from bookstores

(ii). You can buy books from supermarket

(iii). You can order books over the internet (online)

Your manager has an interesting way of classifying expenses. Some of the expenses are classified in terms of size; big, small and medium and others are classified in terms of colours, red yellow, green, violet. The company has a history of categorising overall costs into initial costs and additional costs. Additional costs are equal to the sum of big, small and medium expenses. There are two types of margins, contribution (sales minus initial costs) and profit(contribution minus additional costs). Given below is the data about the sales and costs of B & C.

Sales

Initial costs

Contribution (sales-initial costs)

Additional costs

Big                                                      9300

Small                                                 3000

Medium                                            3500

60000

39000

21000

 

 

 

15800

Profit (contribution-additional cost )

5200

     Each of big, small and medium cost is categorised by the manager into red, green and violet costs. Breakdown of the additional costs under these headings is shown in the table below

Expenses

Total

Red

Yellow

Green

Violet

Big

9300

5100

1200

1400

1600

Small

3000

 

400

2000

600

Medium

3500

500

1500

1400

200

Total

15800

5500

3100

4800

2400

Red, yellow, green and violet costs are allocated to different retail formats. These costs are apportioned in the ratio of numbers of units consumed by each retail format. The number of units consumed by each format is given in the table below

 

Retail format

Red

Yellow

Green

Violet

Online

200

50

50

50

Super market

65

20

21

21

Book store

10

30

9

9

Total

275

100

80

80

Which retail format is least profit making for B and C?

(a)

Online

(b)

Super markets

(c)

Book store

(d)

All formats are loss making


Question ID - 53181 | Toppr Answer

Read the case let carefully and answer the question that follow

The big and colourful company

You are running ‘big and colourful (B & C)’ company that sells books to customers through three retail formats.

(i). You can buy books from bookstores

(ii). You can buy books from supermarket

(iii). You can order books over the internet (online)

Your manager has an interesting way of classifying expenses. Some of the expenses are classified in terms of size; big, small and medium and others are classified in terms of colours, red yellow, green, violet. The company has a history of categorising overall costs into initial costs and additional costs. Additional costs are equal to the sum of big, small and medium expenses. There are two types of margins, contribution (sales minus initial costs) and profit(contribution minus additional costs). Given below is the data about the sales and costs of B & C.

Sales

Initial costs

Contribution (sales-initial costs)

Additional costs

Big                                                      9300

Small                                                 3000

Medium                                            3500

60000

39000

21000

 

 

 

15800

Profit (contribution-additional cost )

5200

     Each of big, small and medium cost is categorised by the manager into red, green and violet costs. Breakdown of the additional costs under these headings is shown in the table below

Expenses

Total

Red

Yellow

Green

Violet

Big

9300

5100

1200

1400

1600

Small

3000

 

400

2000

600

Medium

3500

500

1500

1400

200

Total

15800

5500

3100

4800

2400

Red, yellow, green and violet costs are allocated to different retail formats. These costs are apportioned in the ratio of numbers of units consumed by each retail format. The number of units consumed by each format is given in the table below

 

Retail format

Red

Yellow

Green

Violet

Online

200

50

50

50

Super market

65

20

21

21

Book store

10

30

9

9

Total

275

100

80

80

Which retail format is least profit making for B and C?

(a)

Online

(b)

Super markets

(c)

Book store

(d)

All formats are loss making

1 Answer - 5876 Votes

3537

Answer Key : (b) -

Contribution of super market and book store is 1:2 in remaining 50%.

Contribution of super market =   ×10500 = 3500

Contribution of book stores = × 10500 = 7000

Additional cost for super market = 65×20+20×31+21×60+21×30 = 3810

Profit = 3500−3810 = −310

Additional cost for book store = 10×20 + 30×31 + 9×60+9×30 = 1940

Profit = 7000−1940 = 5060.



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