BUSINESS PAT PREPARATION 1

Tata Motor Company began trading in 1868, and is now part of a large group

of companies that is estimated to be worth $100 billion. Tata Motor Company

manufactures a wide range of cars, buses and trucks. It is India’s largest maker of

vehicles with manufacturing centres in many countries including Korea, Italy

and the UK.

One of the main aims of Tata Motor Company is to produce goods that the public

want and need. It is currently working on electric cars that are more environmentally

friendly. Tata Motor Company plays an active role in community development such as

building schools, houses and investing in the health and welfare of local people.

Which one of the following is an external source of finance?

• Retained profit

• Selling assets

• Sales revenue

• Share capital

In a break-even graph, the break-even point is when:

• total costs and fixed costs are the same

• fixed costs and variable costs are the same

• total costs and revenue are the same

• fixed costs and revenue are the same

Production each month 2,400

Average price per tyre €27

Variable costs per tyre €12

Fixed costs per month €6 000

What are the monthly total costs for the business?

• €8 412

• €34 800

• €74 400

• €204 000

A customer in Germany wishes to buy a Tata Nano car from India. The cost of this

vehicle is 465 000 Indian Rupees (RS). The exchange rate is €1.00 = RS78

What would the German customer pay to the nearest euro for the car?

• €3 621

• €4 650

• €5 962

• €36 270

Yellow, a clothing retailer, is part of BEXIMCO Textiles Limited. Yellow opened in 2004 and

now has 15 stores across Bangladesh and Pakistan, with new stores opening in Dubai

and Toronto. Yellow clothes are mainly manufactured in Bangladesh. Some are bought

from manufacturers in other countries. Yellow expects its suppliers and manufacturers to

provide fair wages and safe working conditions. It requires every manufacturer to commit

to meeting recognised health and safety standards, be ethical and environmentally

sustainable. It encourages all of its manufacturers to use Kaizen.

Which one of the following is an example of a fixed cost?

• Rent

• Overdraft charges

• Raw materials

• Commission

Which one of the following is a long-term source of finance?

• Sales revenue

• Reinvested profit

• Trade credit

• Bank overdraft

In February 2018 Backyard Shoez imported 50 handbags from Italy. Each handbag

cost them €20.

The exchange rate In February 2018 was €1 = 124.48 Kenyan Shillings (Ks).

How much did Backyard Shoez have to pay in Kenyan Shillings for each

handbag imported in February 2018?

• 2 489.60

• 6 224.00

• 24 896.00

• 124 480.00

In February 2018 Backyard Shoez imported 50 handbags from Italy. Each handbag

cost them €20.

The exchange rate In February 2018 was €1 = 124.48 Kenyan Shillings (Ks).

In September 2018 the exchange rate was €1 = 117.79 Ks.

What effect would this exchange rate have on Backyard Shoez if the cost of an

imported handbag remained at €20?

• Import costs would be unchanged

• Net cash flow would improve

• The price of the handbags in euros would rise

• The cost of importing a handbag would fall

Backyard Shoez is a retail business located in Nairobi, Kenya. It sells a wide range of

shoes, handbags and accessories for ladies only. Backyard Shoez has three shops in

Nairobi. The shops are located in a busy shopping centre where there are other

shoe shops.

Which one of the following could be a financial objective for the owners of

Backyard Shoez?

• Personal satisfaction

• Increased production quality

• Increased market share

• Loyal employees

Which one of the following is an external source of finance for the owner of a

business?

• Bank loan

• Retained profit

• Personal savings

• Selling assets