Question

Which year saw the highest percentage decrease in the cash surplus?

• A. 2002
• B. 2004
• C. 2007
• D. 2008

Answer 1

The correct option is B 2004

According to the information given let us first see few formulas and then we can draw a table for revenues, profits, cash surplus and cumulative stock at end of each year.
Total production cost =Fixed Cost +(cost of each unit of body $\times 2$ $\times$ production ) +(Cost of each unit of engine $\times 3$ $\times$ production )
Total revenues =Selling Price $\times$ Sales
Cumulative Stock =(Cumulative Stock of previous year + Production -Sales)
Cash Surplus =(Cash Surplus of previous year + Revenue -Cost)
Also, they have a cash surplus of 10 million and there is no cumulative stock at the starting of the year 2001.
Note:
$CS\to$ Cumulative Stock (year end)
$TPC\to$ Total Production Cost (in millions)
$TSR\to$ Total Selling Revenues (in millions)
$TP\to$ Total Profit at end of year (in millions)
$CSP\to$ Cash Surplus (in millions)
$\begin{array}{cccccc}Years& CS& TPC& TSR& TP& CSP\\ 2001& 3000& 195& 240& 45& 55\\ 2002& 6000& 234& 200& -34& 21\\ 2003& 4000& 425& 484& 59& 80\\ 2004& 7000& 423.4& 345& -78.4& 1.6\\ 2005& 8000& 571.25& 576& 4.75& 6.35\\ 2006& 1000& 466& 570& 104& 110.35\\ 2007& 3000& 464& 420& -44& 66.35\\ 2008& 6000& 480& 420& -60& 6.35\\ 2009& 7000& 422.2& 420& -2.2& 4.15\\ 2010& 3000& 353.75& 532& 178.25& 182.4\end{array}$
$\begin{array}{ccc}Years& CumulativeStock& Percentage\\ & \left(yearend\right)& Change\\ 2001& 55& 450.00\%\\ 2002& 21& -61.82\%\\ 2003& 80& 280.95\%\\ 2004& 1.6& -98.00\%\\ 2005& 6.35& 296.88\%\\ 2006& 110.35& 1637.80\%\\ 2007& 66.35& -39.87\%\\ 2008& 6.35& -90.43\%\\ 2009& 4.15& -34.65\%\\ 2010& 182.4& 4295.185\%\end{array}$