Chapter 12: The business planning process

Chapter test
Answer all questions in the spaces provided. Use the marking scheme as a guide to the time
you should spend on each question.

Time allowed for the test: 40 minutes

TOTAL 18 MARKS

Multiple choice
1. The managers of Magic Carpets decided to conduct a SWOT analysis. They noticed their
warehouse was run down and in need of repair. What is this an example of?
A. Opportunity
B. Strength
C. Threat
D. Weakness
(1 mark)

2. Sandra, the CEO of a clothing retailer, set a goal to open more stores throughout Australia over
the next two years. What type of goal is this an example of?
A. Operational
B. Strategic
C. Tactical
D. Vision
(1 mark)

3. Which of the following is an example of a variable cost?

A. Electricity
B. Insurance
C. Rent
D. Salary
(1 mark)

4. The table below shows a cash flow projection for a business.

Jan Feb Mar

Opening balance ($) 5 000 9000 14000
Cash in ($) 8 000 9 000 10 000
Cash out ($) 4 000 4 000 5 000

What is the projected opening cash balance for April?

A. $5000
B. $14 000
C. $15 000
D. $19 000
(1 mark)

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 Chapter 12: The business planning process

5. How is total revenue calculated?

A. Price x Quality
B. Price – Quantity
C. Price x Quantity
D. Price + Quantity
(1 mark)

Short answer

6. Calculate fixed costs if variable costs are $10 000 and total costs are $50 000. (1 mark)

$50,000 - $10,000 = $40,000

7. Calculate the level of break-even sales, given fixed costs of $60 000, variable costs of $12 per
unit and a selling price of $18 per unit. (1 mark)

Break even sales = $60,000/(18-12) = 10,000 units

8. Outline the purpose of a vision statement. (2 marks)

A vision statement broadly outlines the aspirations of a business. They are focused and concise
and are used to guide management and employees and act as a benchmark for business
decisions as well as establishing a workplace culture.

9. Outline factors that need to be considered when organising resources for operations.
(2 marks)
Human effort, time, money, equipment and materials must be considered when organising
resources for operations.

10. Describe how a business can monitor and evaluate sales. (3 marks)

11. Distinguish between monitoring and evaluating. (4 marks)

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© John Wiley & Sons Australia, Ltd 2

 Chapter 12: The business planning process

© John Wiley & Sons Australia, Ltd 3