MARKETING: CONSUMER BEHAVIOR QUESTION

How might you expect the family purchase process change with changes in family structure (e.g., DEWKS vs. TRADITIONAL)? Note: You must address two (different) stages (in detail) of the family decision making process in you answer (choose any product/service). Further, your answer should address the following questions for two different stages of the family decision making process (e.g., problem recognition).

Q1: What are the behavioral issues of interest under each DM stage (2 different stages)?

Q2: How might customer behavior change across these stages because of family influence?

Q3: How might marketers adjusted the marketing mix to respond to these behavior changes?

A manufacturing company is selling two products, rods and reels, each at $65 per unit. Rods have a variable cost of $30. Reels have a variable cost of $25. Fixed cost for the company is $22,000.

a. If the sales mix is 1:1, (1 rod to 1 reel) what is the breakeven in units of rods and reels?

b. If the sales mix is 1:1, (1 rod to 1 reel) what is the break-even point in dollars of sales?

c. If the sales mix changes to 1:4, (1 rod to 4 reels) what is the break-even point in units of rods and reels?

d. If the sales mix changes to 1:4, (1 rod to 4 reels) what is the break-even point in dollars of sales?

1- A is Trading and Tourism Company.
2- B is the owner of a Building


A interred with B in to an investment Contract where A will take the building as investment which is owned by B and will turn to Hotel. It was agreed that, A prior to invest will take the approval from B on the plans and drawings. A sent the plans and the drawing to B for his approval. It was agreed that within a week if there were no answer from any of the parties on the correspondences of the other for any approval, therefore, it would mean that approval has been granted. A has started to do all the changes according to the plans and the drawings after a week from sending the plans. After a month A has received the reply from B with changes made in the plans and drawings. A has ignored the reply and continue the changes according to his plans. B was not happy and has demanded A to stop the work in the building and deliver the building at the same conditions he received it. A has replied to B that he has invested in the building according to the contract and if he wants the building back he has to pay the cost of his investments and the remedies of the damages that he has incurred. B has refused his demands and asked A to pay for all the repairs and damages caused to his building.
You have been contacted as mediator between the A and B Please answer the following:

1. What kind of relation between A and B?
2. Identify the responsibility for both parties and their civil rights.
3. What is the real problem between the two parties?
4. Does B have the right to stop work in the building and does A have the right to ignore B’s changes in the plans?
5. What action A should take to make B accept the plans and drawings and to finish the work?
6. In your conclusion, you should provide a good solution for A and B to continue to work together without going to litigation.

QUESTION 1 PARTNERSHIP
Use the information extracted from the accounting records of LS TRADING, a partnership owned by partners, LONG and SHORT, and prepare the Statement of Changes in Equity for the year ended 28 February 2017.
NB: copy the format given below in your answer book.
INFORMATION:
1.
Extracts from the Trial Balance on 28 February 2017.
Accounts
Debit
Credit
Capital : Long
300 000
Capital : Short
300 000
Current Account : Long
3 000
Current Account : Short
11 000
Drawings : Long
225 000
Drawings : Short
255 000
2. The net profit on 28 February 2017 amounted to R500 000.
3. The partnership agreement made provision for the following:
 Partners are entitled to the following monthly salaries :
Long, R9 500
Short, R11 000
 Interest on each partner’s capital must be provided at 12% p.a.
NB: Partners had made the following changes to their capitals during the year and were properly recorded:
 Long decreased his capital by R60 000 on 01 June 2016.
 Short increased his capital by R60 000 on 01 September 2016.
 Short is entitled to a special bonus of 10% of the net profit for the year.
 Partners are to share any remaining profits / losses equally.
2
&&
LS TRADING
Statement of Changes in Equity for the year ended 28 February 2017.
CAPITAL ACCOUNTS
Long
Short
Total
Balance on 01 March 2016
Changes in capital
Balance on 28 February 2017
CURRENT ACCOUNTS
Long
Short
Total
Balances on 01 March 2016
Net profit for the year
Interest on capital
Salaries
Bonus
Interest on drawing
Share of remaining profit / loss
Drawings
Balances on 28 February 2017

The security market line (SML) is an equation that shows the relationship between risk as measured by beta and the required rates of return on individual securities. The SML equation is given below:

​

If a stock's expected return plots on or above the SML, then the stock's return is (-Select- insufficient, sufficient) to compensate the investor for risk. If a stock's expected return plots below the SML, the stock's return is (-Select- insufficient, sufficient) to compensate the investor for risk.

The SML line can change due to expected inflation and risk aversion. If inflation changes, then the SML plotted on a graph will shift up or down parallel to the old SML. If risk aversion changes, then the SML plotted on a graph will rotate up or down becoming more or less steep if investors become more or less risk averse. A firm can influence market risk (hence its beta coefficient) through changes in the composition of its assets and through changes in the amount of debt it uses.

Quantitative Problem: You are given the following information for Wine and Cork Enterprises (WCE):

r_RF = 2%; r_M = 7%; RP_M = 5%, and beta = 1.4

What is WCE's required rate of return? Do not round intermediate calculations. Round your answer to two decimal places.
%

If inflation increases by 3% but there is no change in investors' risk aversion, what is WCE's required rate of return now? Do not round intermediate calculations. Round your answer to two decimal places.
%

Assume now that there is no change in inflation, but risk aversion increases by 1%. What is WCE's required rate of return now? Do not round intermediate calculations. Round your answer to two decimal places.
%

If inflation increases by 3% and risk aversion increases by 1%, what is WCE's required rate of return now? Do not round intermediate calculations. Round your answer to two decimal places.
%

Bussines Law:

1. A is Trading and Tourism Company.
2. B is the owner of a Building

A interred with B in to an investment Contract where A will take the building as investment which is owned by B and will turn to Hotel. It was agreed that A prior to invest will take the approval from B on the plans and drawings. A sent the plans and the drawing to B for his approval. It was agreed that within a week if there were no answers from any of the parties on the correspondences of the other for any approval, therefore, it would mean that approval has been granted. A has started to do all the changes according to the plans and the drawings after a week from sending the plans. After a month A has received the reply from B with changes made in the plans and drawings. A has ignored the reply and continue the changes according to his plans. B was not happy and has demanded A to stop the work in the building and deliver the building at the same conditions he received it. A has replied to B that he has invested in the building according to the contract and if he wants the building back he has to pay the cost of his investments and the remedies of the damages that he has incurred. B has refused his demands and asked A to pay for all the repairs and damages caused to his building.

You have been contacted as a mediator between the A and B Please answer the following:

1. What kind of relation between A and B?
2. Identify the responsibility for both parties and their civil rights.
3. What is the real problem between the two parties?
4. Does B have the right to stop work in the building and does A have the right to ignore B’s changes in the plans?
5. What action A should take to make B accept the plans and drawings and to finish the work?
6. In your conclusion, you should provide a good solution for A and B to continue to work together without going to litigation.

Castle, Inc., has no debt outstanding and a total market value of $240,000. Earnings before interest and taxes, EBIT, are projected to be $28,000 if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 12 percent higher. If there is a recession, then EBIT will be 25 percent lower. The firm is considering a debt issue of $140,000 with an interest rate of 6 percent. The proceeds will be used to repurchase shares of stock. There are currently 12,000 shares outstanding. Ignore taxes for this problem.

a-1. Calculate earnings per share, EPS, under each of the three economic scenarios before any debt is issued. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

a-2. Calculate the percentage changes in EPS when the economy expands or enters a recession. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to the nearest whole number, e.g., 32.)

b-1. Calculate earnings per share (EPS) under each of the three economic scenarios assuming the company goes through with recapitalization. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

b-2. Given the recapitalization, calculate the percentage changes in EPS when the economy expands or enters a recession. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

Janet Jennings is the general manager for Mercashoe Store. She is currently working on a major promotional campaign. Her ideas include the installation of a new lighting system and increased display space that will add $24,000 in fixed costs to the existing fixed costs. In addition, Janet is proposing a 5% price decrease ($40 to $38) that will produce a 20% increase in sales volume (20,000 to 24,000). Variable costs will remain at $24 per pair of shoes. Management is impressed with Janet’s ideas but concerned about the effects theses changes will have on the break-even point and the margin of safety.

Information provided:

A. Rental expenses for the store: $5,000 per month.

B. Janet has a salary assigned of $60,000 per year.

C. The store has a sales manager who earns $45,000 per year.

D. There are three salesclerks who have a salary assigned of $25,000 each per year.

E. Social security expenses for each the employees represent 30% of their salary.

F. Utilities expense: $600 per month.

Instructions:

1. Compute the current break-even point in units and compare it to the break-even point in units if Janet’s ideas are implemented.

2. Compute the contribution margin ratio under current operations and after Janet’s changes are introduced. (Round to the nearest full percent).

3. Compute the margin of safety under the two proposals.

4. What is the operating income under each scenario?

5. Prepare a CVP (Cost-Volume-Profit) income statement for current operations and after Janet’s changes are introduced.

6. Prepare a Cost-Volume-Profit graph under the two scenarios.

7. Prepare a report explaining and justifying whether Janet’s changes should be adopted or not and provide suggestions supported by the information provided above. Show your work in Word of Excel

Case 1 – Cost-Volume-Profit Analysis

Janet Jennings is the general manager for Mercashoe Store. She is currently working on a major promotional campaign. Her ideas include the installation of a new lighting system and increased display space that will add $24,000 in fixed costs to the existing fixed costs. In addition, Janet is proposing a 5% price decrease ($40 to $38) that will produce a 20% increase in sales volume (20,000 to 24,000). Variable costs will remain at $24 per pair of shoes. Management is impressed with Janet’s ideas but concerned about the effects theses changes will have on the break-even point and the margin of safety.

Information provided:

A. Rental expenses for the store: $5,000 per month.

B. Janet has a salary assigned of $60,000 per year.

C. The store has a sales manager who earns $45,000 per year.

D. There are three salesclerks who have a salary assigned of $25,000 each per year.

E. Social security expenses for each the employees represent 30% of their salary.

F. Utilities expense: $600 per month.

Instructions:

1. Compute the current break-even point in units and compare it to the break-even point in units if Janet’s ideas are implemented.

2. Compute the contribution margin ratio under current operations and after Janet’s changes are introduced. (Round to the nearest full percent).

3. Compute the margin of safety under the two proposals.

4. What is the operating income under each scenario?

5. Prepare a CVP (Cost-Volume-Profit) income statement for current operations and after Janet’s changes are introduced.

6. Prepare a Cost-Volume-Profit graph under the two scenarios.

7. Prepare a report explaining and justifying whether Janet’s changes should be adopted or not and provide suggestions supported by the information provided above. Show your work in Word of Excel

The College of Business has been having trouble with errors on student admittance records and you have been asked to investigate the cause of the problem. A form is considered defective if it has one or more errors. You think you have found one of the main reasons for the errors but in order to prove it, you decide to develop a process control chart to follow the current process for a few days. On the next three days, you collect 15 samples of 25 forms each and observe the following number of forms with errors on them:

A.) Develop the appropriate process control chart(s) using 3 sigma control limits.

B.) You follow the process for two more days, obtain results similar to that shown above, and correct any special causes that may exist. In an effort to improve the process, you make some changes and after the changes are made, collect five more samples of 25 forms each. The number of defects found is shown below:

**Plot and label these five observations on the same control chart(s) developed in part A. What comments can be made about the process now? Should any changes be made to the old control chart(s) given the new evidence? If so, describe the changes that should be made and explain why. If not, explain why not?**