6.9K views

Uploaded by Hein Linn Kyaw

- Accounting Level 3/series 4-2009
- ABC Level 3 Series 4 2008
- Advanced Business Calculations/Series-3-2011(Code3003)
- Advanced Business Calculations/Series-4-2011(Code3003)
- Accounting/Series-4-2011(Code30124)
- Accounting(IAS)/Series-4-2011(Code3902)
- Advanced Business Calculations Level 3/Series 2 2008 (Code 3003)
- Advanced Business Calculation/Series-4-2007(Code3003)
- Business Statistics Level 3/Series 2 2008 (Code 3009)
- Cost Accounting Level 3/series 2-2009
- Certificate in Advanced Business Calculations Level 3/series 3-2009
- Advanced Business Calculations Level 3/Series 3 2008 (Code 3003)
- Business Statistics Level 3/series 4-2009
- Management Accounting/Series-2-2011(Code3024)
- Advanced Business Calculations/Series-2-2004 (Code3003)
- ASE3003209MA
- Accounting/Series-4-2010(Code3012)
- Accounting/Series-3-2007(Code3001)
- Business Statistics/Series-2-2011(Code3009)
- Business Statistics Level 3/series 3-2009

You are on page 1of 11

Advanced Business

Calculations

Level 3

Model Answers

Series 4 2009 (3003)

information Email. enquiries@ediplc.com

contact us: www.lcci.org.uk

Advanced Business Calculations Level 3

Series 4 2009

Model Answers have been developed by EDI to offer additional information and guidance to Centres,

teachers and candidates as they prepare for LCCI International Qualifications. The contents of this

booklet are divided into 3 elements:

(2) Model Answers – summary of the main points that the Chief Examiner expected to

see in the answers to each question in the examination paper,

plus a fully worked example or sample answer (where applicable)

questions or to examination technique

Teachers and candidates should find this booklet an invaluable teaching tool and an aid to success.

EDI provides Model Answers to help candidates gain a general understanding of the standard

required. The general standard of model answers is one that would achieve a Distinction grade. EDI

accepts that candidates may offer other answers that could be equally valid.

All rights reserved; no part of this publication may be reproduced, stored in a retrieval system or

transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise

without prior written permission of the Publisher. The book may not be lent, resold, hired out or

otherwise disposed of by way of trade in any form of binding or cover, other than that in which it is

published, without the prior consent of the Publisher.

Page 1 of 9

QUESTION 1

(a) How much interest will Natalia have earned after 2 years and 3 months?

(3 marks)

Natalia deposits a further £45,000 in another account at 2.85% per annum compound interest, also

for a period of 2 years and 3 months. Interest is added annually and at the end of the period, and is

calculated as compound interest throughout.

(b) How much less interest will Natalia have earned from this account than from the simple interest

account?

(5 marks)

Natalia invests a further amount at compound interest of 3.1% per annum for 3 years. At the end of

the period, the amount (principle plus interest) is £30,137.60.

(3 marks)

(d) Calculate the rate of simple interest that would give the same interest on this initial amount over 3

years.

(3 marks)

(Total 14 marks)

Number of years

(b) Amount = Principle x (1 + percentage rate)

2.25

Amount = £45,000 x (1.0285) = £47,937.15

3

(c) Initial investment = £30,137.60 / (1 + 0.031) = £27,500

3003/4/09/MA Page 2 of 9

QUESTION 2

Andy buys unit trusts and invests for income. He invested £50,000 in a unit trust with an offer price of

£125 per unit, and sold the units after 5 years at £162 per unit. During this period he received income

from the units of £6,200. This income was not reinvested in units.

(a) Calculate

(iii) the percentage yield per annum represented by this figure. (2 marks)

She bought 2,200 units at a price per unit of £69, plus an initial charge of 5%.

(b) Calculate the total cost of the units including initial charge.

(3 marks)

Beatrice invested her income from the units in purchasing more of the same units.

5 years later, the number of units had grown to 2,532, and the total value of the units was £215,220.

(c) Calculate

(ii) the percentage increase per annum in the price per unit. (2 marks)

(Total 14 marks)

(ii) Increase per annum in unit price = 100% x (£85 - £69) / (£69 x 5) = 4.6%

3003/4/09/MA Page 3 of 9

QUESTION 3

Product P has variable costs per unit of product of £150, and fixed costs of £1,952,000 per period.

Unit costs of production during a trading period are as follows:

£

Components 57

Labour 80

Production overheads 75

Distribution expenses 60

The cost of components varies directly with the number of units produced.

60% of the labour costs vary directly with the number of units produced.

The production overheads do not vary irrespective of how many units are produced.

(a) Calculate the percentage of distribution expenses that vary directly with the number of units

produced.

(4 marks)

(2 marks)

(2 marks)

Product P breaks even on production and sales of 12,800 units per period.

(3 marks)

(2 marks)

(Total 13 marks)

(b) Fixed costs per unit = £57 + £80 + £75 + £60 - £150 = £122

Selling price = Variable cost + contribution = £150 + £152.50 = £302.50 per unit

(e) Total cost of production at break even = (12,800 x £150) + £1,952,000 = £3,872,000

3003/4/09/MA Page 4 of 9

QUESTION 4

A retailer’s balance sheet at the end of a trading year shows current assets of £35,260 and current

liabilities of £17,200.

The current assets include stock of £12,040, bank account of £7,700, cash of £532 and an amount

owed by debtors.

(a) Calculate:

(b) State whether or not you would judge the liquidity of the business to be healthy.

(1 mark)

(1 mark)

The stock held at the start of the trading year was £10,750, and the net purchases during the year

were £138,030.

(d) Calculate:

(Total 13 marks)

(a) (i) Amount owed by debtors = £35,260 – (£12,040 + £7,700 + £532) = £14,988

current liabilities £17,200

(c) The acid test ratio is above the recommended ratio of 1. The business can pay its liabilities

without selling stock.

(ii) Cost of goods sold (CoGS) = stock at start + net purchases - stock at end

average stock £11,395

3003/4/09/MA Page 5 of 9

QUESTION 5

Colin is considering whether to invest in an investment project with an initial cost of £550,000 and an

estimated revenue return of £150,000 per annum for 5 years.

Discounting factor

Year 1 0.901

Year 2 0.812

Year 3 0.731

Year 4 0.659

Year 5 0.593

(4 marks)

(b) Advise Colin whether the project is a worthwhile investment at the discount rate used.

(1 mark)

(2 marks)

(d) Explain what the net present value calculated in (a) represents.

(1 mark)

At a discount rate of 10% the project has a net present value of £18,500.

(3 marks)

(Total 11 marks)

(a) Present value of revenue = £150,000 x (0.901 + 0.812 + 0.731 + 0.659 + 0.593)

(d) The positive net present value in (a) means that the project is expected to earn more than 11%.

£18,500 - £4,400

3003/4/09/MA Page 6 of 9

QUESTION 6

Owed to unsecured creditors £95,000

Total assets as a percentage of total liabilities 60%

(a) Calculate:

(ii) the amount paid to an unsecured creditor who is owed £11,000 (2 marks)

Total liabilities £53,086,205

Owed to secured creditors £29,500,000

(b) Calculate the amount owed to unsecured creditor C who is paid £1,072.20.

(4 marks)

(Total 11 marks)

(ii) Paid to unsecured creditor who is owed £11,000 = 0.42 x £11,000 = £4,620

3003/4/09/MA Page 7 of 9

QUESTION 7

Equipment E is depreciated over a period of 7 years, with an initial cost of £65,000 and an estimated

scrap value after 7 years of £2,000.

The depreciation is calculated separately by two methods, the equal instalment method and the

diminishing balance method.

Calculate:

(a) using the equal instalment method, the percentage of the initial cost to be written off each year.

(3 marks)

(4 marks)

(c) the year in which the two methods give amounts of depreciation that are closest to each other.

show your working.

(3 marks)

(d) using the diminishing balance method, the amount of depreciation in year 7.

(2 marks)

(Total 12 marks)

7

Over one year = 0.03076923 = 0.608158

(c) Depreciation in each year using the equal instalment method = £9,000

6

= £65,000 x 0.61 x 0.39 = £1,306.04

3003/4/09/MA Page 8 of 9

QUESTION 8

An index of production has the following values, based on year 2005 = 100.

(a) Explain the change that occurred between 2005 and 2008.

(3 marks)

(b) Write the indices for 2007 and 2008 as a chain base index.

(3 marks)

(4 marks)

(d) Calculate the index for 2005, with 2004 as the base year.

(2 marks)

(Total 12 marks)

EDI

International House

Siskin Parkway East

Middlemarch Business Park

Coventry CV3 4PE

UK

Fax. +44 (0) 2476 516505

Email. enquiries@ediplc.com

www.ediplc.com

All rights reserved. This publication in its entirety is

the copyright of Education Development

International Plc. Reproduction either in whole or

in part is forbidden without the written permission

from Education Development International Plc.

- Accounting Level 3/series 4-2009Uploaded byHein Linn Kyaw
- ABC Level 3 Series 4 2008Uploaded byLeslie Gray
- Advanced Business Calculations/Series-3-2011(Code3003)Uploaded byHein Linn Kyaw
- Advanced Business Calculations/Series-4-2011(Code3003)Uploaded byHein Linn Kyaw
- Accounting/Series-4-2011(Code30124)Uploaded byHein Linn Kyaw
- Accounting(IAS)/Series-4-2011(Code3902)Uploaded byHein Linn Kyaw
- Advanced Business Calculations Level 3/Series 2 2008 (Code 3003)Uploaded byHein Linn Kyaw
- Advanced Business Calculation/Series-4-2007(Code3003)Uploaded byHein Linn Kyaw
- Business Statistics Level 3/Series 2 2008 (Code 3009)Uploaded byHein Linn Kyaw
- Cost Accounting Level 3/series 2-2009Uploaded byHein Linn Kyaw
- Certificate in Advanced Business Calculations Level 3/series 3-2009Uploaded byHein Linn Kyaw
- Advanced Business Calculations Level 3/Series 3 2008 (Code 3003)Uploaded byHein Linn Kyaw
- Business Statistics Level 3/series 4-2009Uploaded byHein Linn Kyaw
- Management Accounting/Series-2-2011(Code3024)Uploaded byHein Linn Kyaw
- Advanced Business Calculations/Series-2-2004 (Code3003)Uploaded byHein Linn Kyaw
- ASE3003209MAUploaded byHein Linn Kyaw
- Accounting/Series-4-2010(Code3012)Uploaded byHein Linn Kyaw
- Accounting/Series-3-2007(Code3001)Uploaded byHein Linn Kyaw
- Business Statistics/Series-2-2011(Code3009)Uploaded byHein Linn Kyaw
- Business Statistics Level 3/series 3-2009Uploaded byHein Linn Kyaw
- Accounting/Series-2-2011(Code3012)Uploaded byHein Linn Kyaw
- Management Accounting/Series-4-2011(Code3024)Uploaded byHein Linn Kyaw
- Business Statistics/Series-3-2010(Code3009)Uploaded byHein Linn Kyaw
- Cost Accounting/Series-2-2011(Code3017)Uploaded byHein Linn Kyaw
- Business Statistics Level 3/Series 4 2008 (3009)Uploaded byHein Linn Kyaw
- Management Accounting/Series-3-2010(Code3024)Uploaded byHein Linn Kyaw
- Business Statstics/Series-4-2011(Code3009)Uploaded byHein Linn Kyaw
- Management Accounting Level 3/series 4-2009Uploaded byHein Linn Kyaw
- Business Statistics/Series-4-2010(Code-3009)Uploaded byHein Linn Kyaw
- 2011 LCCI Accounting IAS Level-3 Series 2 (Code 3902)Uploaded byHon Loon Seum

- Accounting/Series-2-2007(Code3001)Uploaded byHein Linn Kyaw
- Book keeping & Accounts/Series-2-2007(Code2006)Uploaded byHein Linn Kyaw
- Management Accounting/Series-3-2007(Code3023)Uploaded byHein Linn Kyaw
- Accounting(IAS)/Series-4-2011(Code3902)Uploaded byHein Linn Kyaw
- Accounting(IAS)/Series-3-2010(Code3902)Uploaded byHein Linn Kyaw
- Cost Accounting/Series-3-2007(Code3016)Uploaded byHein Linn Kyaw
- Business Statstics/Series-3-2007(Code3009)Uploaded byHein Linn Kyaw
- Accounting/Series-4-2007(Code3001)Uploaded byHein Linn Kyaw
- Advanced Business Calculation/Series-4-2007(Code3003)Uploaded byHein Linn Kyaw
- Accounting/Series-3-2007(Code3001)Uploaded byHein Linn Kyaw
- Book Keeping & Accounts/Series-3-2007(Code2006)Uploaded byHein Linn Kyaw
- Cost Accounting/Series-4-2011(Code3017)Uploaded byHein Linn Kyaw
- Accounting(IAS)/Series-4-2007(Code3901)Uploaded byHein Linn Kyaw
- Management Accounting/Series-4-2007(Code3023)Uploaded byHein Linn Kyaw
- Management Accounting/Series-4-2011(Code3024)Uploaded byHein Linn Kyaw
- Management Accounting/Series-3-2010(Code3024)Uploaded byHein Linn Kyaw
- Cost Accounting/Series-4-2007(Code-3016)Uploaded byHein Linn Kyaw
- Business Statstics/Series-4-2007(Code-3009)Uploaded byHein Linn Kyaw
- Management Accounting/Series-4-2010(Code3024)Uploaded byHein Linn Kyaw
- Book-Keeping and Accounts/Series-4-2011(Code2007)Uploaded byHein Linn Kyaw
- Book Keeping & Accounts/Series-4-2007(Code2006)Uploaded byHein Linn Kyaw
- Business Statstics/Series-4-2011(Code3009)Uploaded byHein Linn Kyaw
- Business Statistics/Series-3-2010(Code3009)Uploaded byHein Linn Kyaw
- Business Statistics/Series-4-2010(Code-3009)Uploaded byHein Linn Kyaw
- Cost Accounting/Series-3-2010(Code3017)Uploaded byHein Linn Kyaw
- Lcci Level3 Solution Past Paper Series 3-10Uploaded bytracyduckk
- Code 2007 Accounting Level 2 2010 Series 4Uploaded byapple_syih
- Accounting IAS Model Answers Series 4 2010Uploaded by7thDevil

- Financial Ratio AnalysisUploaded bypradeep
- Solutions Corporate Finance[1]Uploaded byUsman Uddin
- -chap021Uploaded byErika D. dela Cruz
- Yield Curves and Term Structure of Interest RatesUploaded byAkash Mehta
- Ratio Analysi1Uploaded byPranay Daga
- Milestone and EventsUploaded byRonald Samuel Gozali
- Porsche changes tackUploaded byMahendra Singh Dhoni
- Project Management for Construction_ Financing of Constructed FacilitiesUploaded byFarid Morgan
- Basic Training NewUploaded byChetakPatel
- 15083849 ACCA F7 Financial Reporting Solved Past PapersUploaded byCyndichriselda
- CapitalUploaded bycfmbaims
- Bond Market Pricing ConventionsUploaded byLu Danqing
- Oil & Gas Investment BankingUploaded byCanberk Dayan
- guidelinesUploaded byShaiksha Vali
- Study Djeurostoxx50 Div FutUploaded byrajattiwari.srcc
- Theory CoC and WACCUploaded byMisky1673
- Er Project Report in Aditya BirlaUploaded byDilip Kumar
- Practice Questions Final Exam-financial managementUploaded byNilotpal Chakma
- Citi Guide to Structured Product TerminologyUploaded byblurking6969
- Finacial Term for MBA studentUploaded byNarendra Pandey
- Final Exam sample.pdfUploaded bybabak84
- Chap 007Uploaded byXeniya Morozova Kurmayeva
- RREEF Real Estate Global Real Estate Strategic Outlook April 2012Uploaded byAlfonso Ponce
- Alfred Lee - BMO ETF Portfolio Strategy Report January 2014 -Uploaded bydpbasic
- Lums Cases Bibliography FinalUploaded byOsman Anwar
- AltaRock MidYear Letter 2010Uploaded byadib_motiwala
- Yield Curves RiskWorXUploaded byraghu_prabhu
- Keown4_FMUploaded byHiren Prajapati
- Emerging Market Debt And The Three CsUploaded byAnonymous Ht0MIJ
- US Treasury and Repo Markt ExerciseUploaded bychuloh