BUS100

Business Skills and Management

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Class Test

CT01

JULY 2020 SEMESTER

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CLASS TEST (CT01) – 30%

Please read this instruction carefully before the attempt. This test is worth 30% of the final
mark for BUS100 Business Skills and Management.

This paper consists of 8 pages.

You are NOT required to do documentation for this test and doesn’t need to fit into A4
page. Just answer the question and label all parts clearly.

It is an individual test; you should work on it yourself. Plagiarism is a serious offense and
anyone found cheating will get a ZERO for the test.

This is an open-book test and covers all study units. You may use Excel or other spreadsheet
applications on your computer. You are, however, not allowed to communicate with others.

The two-hour test comprises of two questions, each constituting 50 marks, giving a total of 100
marks. Please include a Cover page worksheet in the Excel workbook, which should contain
your Name, PI Number, TG Group. For each question, create its own worksheet (Q1 and Q2)
and create appropriate Excel models to analyse it. You should save your models in an
appropriate xlsx Excel file. You should only submit one workbook for this class test.

Read the question carefully before an attempt. For each question, review all its parts and
questions given first before doing anything.

Using your computer, construct the spreadsheet models required, and clearly label all the parts
and provide answers to the questions asked.

You need to submit only one Excel workbook in your individual TG group and cut-off
time is 12 Sep, 12 noon, 2020.

The filename should follow the format: BUS100_CT01_YOURFULLNAME.xlsx

There is a penalty for a late submission.

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You must answer ALL the questions. (Total 100 marks)

Q1: (50 marks)

Part (A) to Part (E) are based on Q1.

ABC E-Store is a new e-commerce site. There were 10,000 visits to the website in the first
month, of which 1% of visits resulted in purchases, each averaging $25. The company thus
earned (1%*10000*25=) $2500 of revenue in the first month. Number of visits to the site is
expected to increase with growth rate of 5% per month from month 2 onwards. So, the expected
number of visitors in the second month is ((105%)*10000=) 10500. With the proportion of
visits with purchases for other months expected to remain at 1%, there would be 105 visits with
purchases and revenue of (105*$25 =) $2625 in the second month. Similarly, revenue can be
estimated for other months. Noting cost of goods sold (COGS; inclusive of other expenses) is
60% of revenue, profit/loss can now be computed for all months.

To boost sales, ABC is considering spending $5000 per month, for the next 24 months, in a
marketing campaign. With this campaign, the buy conversion rate is expected to increase from
1% to 3% and (from month 2 onwards) market growth rate increase from 5% to 8%, while the
average customer spending per visits with purchases is expected to remain unchanged. Thus in
the first month, there would 300 visits with purchases and revenue becomes $7500; and in the
second month, 10800 site visits, 324 visits with purchases. The company only has $6,000 as an
initial start-up cost and therefore need to be careful about whether the additional cost involved
in marketing is prudent.

Table 1.1 shows the parameters and some computations.

Table 1.1: Input parameters for without marketing and with marketing
Without marketing With marketing

Initial visitors 10,000 10,000

Growth rate 5% 8%
Buy conversion rate 1% 3%
Monthly marketing expenses $0 $5,000
Average sale ($) per visit with
purchase $25 $25
COGS (inclusive of other expenses) 60% of revenue 60% of revenue
Initial start-up cost ($) $6,000 $6,000

Now, apply spreadsheet modelling to assist ABC to analyse the company’s monthly finances
for two years (24 months), under both two scenarios: “Without Marketing” and “With
Marketing". Use the spreadsheet template given below. For each row in the table, representing
a month, show the # of site visitors, # of visits with purchases, Revenue ($), Expenses ($), and
Profit/Loss ($). In the last column, compare the profit/loss ($) of the two scenarios, and indicate
whether marketing is better (Y/N). At the end of 24 months, give a summary of total and
average of revenue, expenses and profit. Using your analysis, ABC E-Store should be able to
determine whether to have the marketing campaign or not.

You must practise principles of correct spreadsheet construction and design (e.g. formulas in
the first two rows should be used to fill the rest of the rows without much modification).

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Implement the model with Excel formula and functions in the yellow shaded blank cells in the
template. You must demonstrate how the company’s finances change over the 24 months.

Display all the answers correct to 2 decimal places. Label all parts clearly in your answers.

Table 1.2: Template for Q1

Without Marketing Campaign With Marketing Campaign
Month Visits Visits Revenu Expens Profit Visits Visits Revenue Expen Profit Is
with e ($) e ($) /Loss with ($) se / Loss having
purchase ($) purchas with ($) marke
s e mark ting
eting campa
($) ign
better
?
(Y/N)
1 10000 100 $2500 10000 300 $7500
2 10500 105 10800 324
..
23
24
Total Total
Average Average

a. Refer to the template given, compose a spreadsheet model that would allow ABC to
compute its finances each month for the first 24 months with and without marketing
campaigns. Show the table clearly in your answer. What is the total revenue ($), total
expenses ($) and total profit with and without marketing after 24 months? After 24
months, compute the average revenue ($), expenses ($) and profit per month with and
without marketing? (20 marks)

b. Refer to table generated above, based on the model, would you recommend ABC to
employ the marketing campaign with an initial start-up cost of $6000. Justify your
answer. (5 marks)

c. Apply the model to help ABC to achieve the target of $150,000 total revenue at the end
of 24 months without the marketing campaign. Demonstrate what sales amount per visit
with purchases is needed to achieve the target? Explain how you derive the answer?
(5 marks)

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 d. Create a table to compare the profit for both scenarios and display the result. What is
the total number of months, profit with “marketing” is better than profit with “no
marketing” during the 24-month period? What is the percentage of months (in the 24-
month period) in which profit with “marketing” is better? (5 marks)

e. Use a scatter plot to show the relationship between the profits for two scenarios over
24 months, where x-axis is the number of months and y-axis is the profit. You need to
label your graphs properly. Determine the equation of the line to compute the profit
with marketing in the future: x is the number of month and y is the profit for the month.
What is the intercept and slope of this line? Solve the equation of the line, what would
be the “with marketing” campaign profit for month 80? Show your answer to the
nearest $. (15 marks)

SINGAPORE UNIVERSITY OF SOCIAL SCIENCES (SUSS) CT01 – Page 5 of 8

Q2: (50 marks)

Part (F) – Part (J) are based on business scenario Q2.

Ivan has set up an online shop that sells disinfectant spray, hand sanitizer, mask (50 pieces per
box) and tissue box. Unit cost and selling price of the products are given in the table below.
Customers who buy more than a certain amount ($) will get a discount. If a customer spent
between $25 to $50, there will be a $3 discount; between $51 to $80, a $6 discount; between
$81 and $120, a $10 discount; more than $120, a $15 discount. Only one discount can be given
per customer. There is a flat shipping charge of $1.99 for sales amount less than or equal to
$60; otherwise, shipping is free.

Table 2.1: Unit cost and selling price

Code Description Unit Cost ($) Selling Price ($)

D01 Disinfectant spray $ 10.00 $ 14.90
H01 Hand Sanitizer $ 5.00 $ 8.90
M01 Mask (50 pc) box $ 15.00 $ 28.90
T01 Tissue box $ 2.50 $ 4.50

Copy the above table into your spreadsheet for this question to help you compose a spreadsheet
model, using the template below. You should copy the same cell in the template to your
worksheet.

Implement a spreadsheet model to help Ivan give the price quote for a customer order. You
should apply appropriate Excel functions and formula to automatically look up product
description and selling price, and other information for each code and purchase quantity
entered. Your model should calculate the Total before discount ($), look up the Discount ($),
Total charge after discount ($), Shipping charge ($) and determine Total Due ($) after
discount inclusive of shipping.

Ivan has an operating budget of $20,000 for buying the products from overseas suppliers at
their unit costs ($). There are no discounts from suppliers since the prices are already lowest in
the market, and associated taxes included. Based on past experience, total purchase quantity of
tissue must be at least three times (x3) that of mask; and total quantity purchased for hand
sanitizer is two times (x2) that of disinfectant spray. Ivan needs to get at least 100 of each
product, to ensure that there is assortment variety to sell. Due to warehouse space constraint,
total quantity stored should not be more than 5000. How many of each product should be
purchased from suppliers to maximize its profit (assuming there is no discount and no tax)?

You may assume that all the items take up the same storage space.

Display all answers to 2 decimal places. Label all parts clearly in your answers.

SINGAPORE UNIVERSITY OF SOCIAL SCIENCES (SUSS) CT01 – Page 6 of 8

Table 2.2: Template for Q2

f. Implement a spreadsheet for the customer and show the decision model. If a customer
bought 2 of D01 and 2 of H01, what is the total charge inclusive of shipping ($)? If a
customer bought 1 of D01, 5 of M01 and 2 of T02, what is the total charge inclusive of
shipping ($)? (15 marks)

g. What is the profit ($) and profit margin (%) from the sale of 100 boxes of Mask?
Show your model in the answer. (5 marks)

h. Based on Ivan’s budget, use Excel Solver to solve for the quantities of each product to
purchase to maximize his profit. You must also demonstrate how to apply Solver by
describing in words the objective and constraints, and implement the model. Show the
quantity to buy for each product and how much is the maximum profit.
(10 marks)

Part (i) to (j) will be based on the following scenario.

Ivan needs $20,000 to start the business. He currently has $6,500 in his bank account and plans
to get a two years (24 months) personal loan from the bank for the remaining amount. The bank
charges an interest rate of 6.88% per annum. Show your formula and working clearly.

i. What will be his monthly payment for the loan tenure of two years if he pays the fixed
amount at the end of each month for 24 months?

After looking at the monthly payment above, Ivan feels that he needs a more flexible
loan than paying the fixed amount each month. Ivan wants a more flexible loan in which
he pays $500 per month for 24 months and the remaining as a lump sum at the end of

SINGAPORE UNIVERSITY OF SOCIAL SCIENCES (SUSS) CT01 – Page 7 of 8

 24th month. What would be the last lump sum payment amount? How much will be the
total amount of interest paid? (15 marks)
(Hint: Total interest paid = total payment – total loan amount)

j. Ivan could only pay $500 per month for 24 months and the same interest rate of
6.88%, with no lump sum payment to the bank at the end and zero balance remaining.
How much loan he should take up from the bank? To start his business, how much
should be his initial cash-on-hand?
(Hint: $20,000 will be made up of his initial cash-on-hand and bank loan amount)
(5 marks)

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