Questions -

Tivoli A/S

The amusement park Tivoli was founded in 1843 and has become a national asset and an international attraction. Adventure Author Hans Andersen visited the garden many times, as did Walt Disney and lot of other celebrities, who all fell in love with the garden's magical universe.

Part of Tivoli's secret is that there is something for everyone. The old garden is more beautiful than any other amusement park with exotic architecture, historic buildings and lush gardens. In the evening creates thousands of colored lights an adventurous ambience that is truly unique.

Description of the situation:

You will start your practice period at Restaurant Nimb Bar'n' Grill at Tivoli A/S shortly from now.

Peter is the Chief Executive of Nimb Bar'n' Grill. Unfortunately, it took Peter never much time to familiarize themselves with the economic aspects of its managerial responsibilities. Fortunately, he got often help from other people. As a new employee in the department, he has asked for your assistance to answer some financial questions.

Sub question no. 1 -

Peter realized that "Cost of goods sold" fell from 3.23 million in 2014 to 3.00 million in 2015. He is a little unsure about what "Cost of goods sold" refers to.

Sub question no. 1.1: Explains the difference between the costs, disbursements and "Cost of goods sold".

Peter will soon receive financial ratios for his own restaurant, which is expected to become in conjunction with key figures from Tivoli's annual report, in which not least the profitability of the department to be compared to the profitability of Tivoli.

Sub question no. 1.2: Based on the extract from the annual report for Tivoli 2015, Peter has asked you kindly to calculate the key rations of rentability for Tivoli for the period shown below.

Sub question no. 1.3: Please comment on the rentability and explain the economic development for Tivoli A/S for the period 2011 - 2015.

Sub question no. 2 -

As manager Peter, has helped to adjust the staffing level in the restaurant several times to accommodate changes in circulation. Peter knows from experience that when staffing is too low, it can affect customer satisfaction in the department.

After the meeting, Peter was presented with the following information concerning the expectations of his department for the coming season, (Restaurant Nimb Bar'n' Grill is open the whole year):

The revenue for the first quarter shown DKK 912.500 and expect to be 10% of the total revenue for the year.

Costs of goods sold for the first quarter is DKK 328.125. The expectations for the costs of goods sold the rest of the year follows proportionally to revenue of the year

Tangible assets: DKK 960.000 as per December 31, last year

Cost of salary: DKK 220.000 monthly

Marketing costs: DKK 10.000 monthly

Other fixed costs: DKK 55.000 monthly

Depreciation follows the straight-line method with 20% on a yearly basis.

Sub question no. 2.1: Please prepare a profit and loss budget for the year 2016.

Peter is not sure that the budgeted revenue is high enough. He expects that realized revenue will be five percent higher than budgeted. The restaurant has enough capacity to handle the five percent increase, although it would require more staff. Peter assess the increased employee cost to be DKK 40,000 monthly as from May 2016 and the rest of the year.

Sub question no. 2.2: Please prepare a profit and loss budget for the year 2016 including grow in revenue and increase in cost of salary by 5% respectively.

Sub question no. 2.3: Please compare the profit margins for the two calculated budgets and please advice and explain whether Peter should staff additional people to the restaurant.

Sub question no. 3 -

As one of the "better" restaurants in Tivoli Nimb Bar 'n' Grill a menu containing several steak variations. The restaurant has seen demand from Asian customers at very exclusive cuts of meat in absolute excellence.

Peter has - in cooperation with Nimb's Chef - given birth the idea of launching a fillet steak from the Kobe cattle. He has given you the following information:

• An ordinary tenderloin steak with site orders sold for DKK 235 per menu
• Requirement gross margin should be 70%.
• The commodity price of Kobe beef, tenderloin cut into a steak is DKK 540
• In addition, the cost of the accessories which is DKK 45 per menu
• Other variable costs are judged to be DKK 69 per menu

Sub question no. 3.1: Please calculate the price of this menu based on information from Peter and the desire to keep the gross margin for the menu as is.

Sub question no. 3.2: Please advise Peter whether or not the new dish should be on the menu card and whether you would suggest another price than calculated in sub question 3.1. In addition to this please state the new price and please argue for your suggestion.

Sub question no. 4 -

Please consider the statements as listed below and judge whether the individual statements are correct or wrong.

Please refer to the question number in your reply.