SENSITIVITY ANALYSIS AND CONFLICT MANAGEMENT (ABTP4708)
Agribusiness Technology - ABT
Semester: First Semester
Level:
Year: 2016
Course: Sensitivity Analysis and Conflict Management
Time allocation: 3 Hours
Instructions: Answer each section separately in your answer booklet
Section A: Sensitivity Analysis
Question.1
i. Define the following terms as used in sensitivity analysis; (10 marks)
a) Sensitivity Analysis b)A strategy c) An optimal strategy d)Break even Value e) Decision Variable f)Senario
ii. Outline and explain the importance of sensitivity analysis (5marks)
iii. State four the different methods used to processing sensitivity analysis (2marks)
2. Mr Godlove plans on establishing a retail business, selling Agricultural produce (Feed and maize seeds in bags). The name
of his business will be the Goddy Agric produce company limited. The projected start date for the company is January 1, 2018
Godlove has just completed his forecasted financial statements for a three year period. (That is forecasted balance sheet,
forecasted cash flow statement and forecasted income statement). He is now trying to develop a forecasted sensitivity analysis
for the 2018 year but seems to be having some difficulty. Godlove calls on you and says; “I
have just finished developing
my forecasted financial statements for my business years 2018, 2019, and 2020. I am attempting to develop my
forecasted sensitivity analysis for 2018, but 1 don't know where to start. My banker suggests the analysis should show
the effects on my original forecasted net income at sales increases of 10% & 20% and at sales decreases of 10% and
20%. Can you prepare my 2018 forecasted sensitivity analysis for me?"
You accepted the challenge and asked Mr. Godlove to provide the following information:
• His 2018 forecasted income statement;
• A list of his fixed cost and variable costs;
• The amount he pays his suppliers for each bag of maize; and
• The amount he plans to sell each bag of maize to his customers.
Ron collects all the requested data and faxes the following information to you.
THE GODDY AGRIC PRODUCE COMPANY LIMITED FORECASTED INCOME STATEMENT FOR
YEAR ENDING DECEMBER 31,200X
200X
Sales
$150,000
Cost of Goods Sold
$52,000
Gross Margin $98,000
Operating Expenses (marketing & administrative expenses)
S40.000
Net Income
Before Taxes
$58,000
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Additional Information Provided By Godlove:
I will buy a bag of feed from a wholesaler for $150 each (transportation included).
1 plan to sell each bag of feed to my customers for $300 each.
In 2018, I project to sell 500 bags of feed.
The only variable cost is my forecasted cost of goods sold.
All my Operating Expenses (marketing & administrative expenses) are fixed costs.
Do not consider income taxes in my sensitivity analysis.
Solve the following;
1. What would sales (in dollars) be if the original forecasted sales were increased and decreased by 10% & 20%?
(4marks)
2. What would variable costs (in dollars) be if the original forecasted sales were increased and decreased by 10% & 20 %?
(4marks)
3. What would fixed costs (in dollars) be if the original forecasted sales were increased and decreased by 10% & 20%?
(4marks)
Question.3
Consider the information in the table below and answer the questions that follow, (do all workings) (6 marks)
Controllable output
Unit price
29
Uncontrollable output
Unit sold
700
Unit variable cost
8
Fixed cost
12000
Performance measured
Net cash flow
a. Calculate cash flow
b. What will be the quantity sold if cash flow changes to 4300
c. Calculate the breakeven unit
SECTION B: CONFLICT MANAGEMENT (35 Marks)
1. Define the following: 1.1. Conflict Analysis; 1.2. Conflict Sensitivity, 1.3. Violent conflict; 1.4. Do-no-harm (7.5 marks)
2. Why is conflict analysis necessary? (5 marks)
3. How can conflict analysis be applied in the project cycle? (5 marks)
4. Outline the different views of conflict (5 marks)
5. Discuss the feminist and postmodern theories of conflict (5 marks)
6. Show that conflict profiling and analysis of causes of conflicts are complementary but separable steps in conflict analysis.
Remember to present the key issues or questions needed to do a good analysis at each stage (7.5 marks)
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