MULTIPLE-CHOICE TASKS 30% Only one alternative is co
ect. Write the answers on a separate form,
page 9 No minus points will be awarded. Remember that the sheet must be handed in as part of the
answer.
A1.What do we call the difference income when the change in production goes towards zero (one
unit)? A. Total income B.The average income C. Gross income
A2.What do we mean by depreciation?
A. Depreciation measures costs associated with fixed assets
B. Depreciation means a financial rejection of capital equipment
C. Depreciation is made to reduce the tax burden
A3.The service company normally lacks a significant cost type, which is found in both industrial
companies and in trading companies. A. Accord salary B.Material costs C.Depreciation
B4. The "time limitation equation" or the "stock law" reads as follows A. UB + Procurement = IB +
Consumption B. IB + Procurement = UB + Consumption C. IB - Acquisition = UB + Consumption
A5.The gross profit is defined as A. The profit as a percentage of sales
B. The profit as a percentage of the purchase price
C. The sum of the profit surcharge and VAT surcharge
A6.How much is the value added tax a retailer pays to the state when the product . 400 and sale
price including VAT. is Er. 750
A. Eur 50
B. Eur 250
C. Eur 100
A7.Assume that an item has a price elasticity of - 2.0 This means that a price reduction of 20% gives
an approximate
A. Reduction in quantity of 40%
B. Increase in amount of 40%
C. Increase in amount of 20% A8.
A company wants to attach a new department head, but has a limitation with regard to total annual
salary cost for this manager of Eur. 450,000. What annual salary, excl. holiday pay they can offer this
manager. The rates for holiday pay and employer's contribution are resp. 12% and 14.1%
XXXXXXXXXXB XXXXXXXXXXC XXXXXXXXXX
B2.1 Draw a zero-point diagram for the «Mini factory». In the diagram, mark the zero point both in kroner and
the number of units, as well as the deficit area and the profit area.
B2.2 What safety margin in kroner and% did the «Mini factory» have last year? How do you interpret the safety
margin in this case?
B2.3 How many units must the «Mini factory sell if it has a target operating profit of Eur 200,000 next year?
B2.4 After a period of declining turnover, the « mini factory» is considering giving a 15% discount on the mini to
try to increase turnover. How much must sales at least increase for this to be a profitable proposal?
C. BUSINESS PLAN / ENTREPRENEURSHIP 16%
Mr x has just inherited Eur 800,000. He has long been involved in the idea of starting for himself, organized as a
limited company, with the inheritance as start-up capital. However, he is a little in doubt about how wise it is.
As he sees it, he can alternatively invest the money in shares and believes he can achieve an annual return of
15%. If he starts for himself, he expects to have a turnover of Eur 1,700,000 per year in the first years, while the
operating cost and cost of goods will amount to Eur 1,000,000. He is cu
ently employed by the local savings
ank and has a salary of Eur XXXXXXXXXXa year, incl. Holiday pay. Rune Nyberg works in employer's contribution
zone 1 (which has a rate of 14.1%).
C1 Should Mr x start for himself? Ignore taxes.
C2 Are there factors other than the purely financial ones that can influence such a decision?
C3 An alternative for Rune is to organize the company as a sole proprietorship. Briefly explain what
characterizes sole proprietorships and limited companies.
C4 Briefly discuss the most important factors Rune must consider when choosing a company form.