Introduction to Caselets:
1) The data is usually in the form of a paragraph.
2) It is one of the most difficult to manage since the interpretation of required data in a meaningful manner is left to the student’s ability to comprehend the hidden facts.
Logical Reasoning Set 8
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BILT has 10% market share in paper and sells 1000 pieces for Rs 10 each. It launches a new product to captivate the customer.
The overall market grows by 20% each year for the next 2 years and BILT is able to increase its market by gaining 20% market
share every year for the next 2 years. It raises prices by Rs 5 every year. The cost structure has a fixed and a variable component.
Its fixed costs are Rs 5000 every year. Variable costs are Rs 5 in the first year and this increases by Rs 3 every year. The market
share here refers to the volume, i.e. number of items sold. Revenue = number of items sold * price Profit = Revenue – Total Costs |
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Check Your Learning:
Questions Set 8
Q1) What is the market size in the second year?1) 3600
2) 12000
3) 1200
4) Data Insufficient
Q2) What is BILT's revenue in the first year?
1) 1000
2) 5000
3) 7500
4) 10000
Q3) What was BILT's average revenue over the 3 years?
1) 66000
2) 66330
3) 69330
4) 75000
Q4) What is the profit made by the company in the 3rd year?
1) 26800
2) 59800
3) 64800
4) 46300
Q5) What would BILT's selling price in the 3rd year have been, had the profits in the 3rd year the same as the second year's profit?
1) 15
2) 20
3) 14.5
4) Data Insufficient
SOLUTIONS:
| Year | BILT Share | Market Size | Sales | Price | Revenue |
|---|---|---|---|---|---|
| Year 1 | 0.1 | 10000 | 1000 | 10 | 10000 |
| Year 2 | 0.3 | 12000 | 3600 | 15 | 54000 |
| Year 3 | 0.5 | 14400 | 7200 | 20 | 144000 |
| Year | Revenues | Fixed Cost | Variable Cost | Profit |
|---|---|---|---|---|
| Year 1 | 10000 | 5000 | 5000 | |
| Year 2 | 54000 | 5000 | 28800 | 20200 |
| Year 3 | 144000 | 5000 | 79200 | 59800 |
Q2) Option 4.
Q3) Option 3.
Q4) Option 2.
Q5) Option 3.