F2 ACCA MOCK EXAM

Section B Qu
Section B – question 1
Able Ltd considering a new project for which the following information is available:
Initial cost = $300,000
Expected life = 5 years
Estimated scrap value = $20,000
Addition revenue from the project = $120,000 per year
Incremental costs of the project = $30,000 per year
Cost of capital = 10%
A) Calculate the Net Present Value of the project (to the nearest $). (3marks)
B) Calculate the Accounting Rate of Retutn of the project (to the nearest %) (3 marks)
C) Calculate the Payback Period for the project (2 marks)- 2.5 years OR 5 years OR 3 years
OR 3.33 years
D) This other project will have a ______ (positive OR negative) Net Present Value at Able’s
Cost of Capital (2 marks)
Question 2 (a)
Beech Ltd has budgeted on producing 12,000 desks during April. Their standard cost card shows
the standard usage of wood to be 1.5 metres per desk at a standard cost of $5 per metre.
They actually produced 15,000 desks and used 24,000 metres of wood at a cost of $108,000
A) The materials price variance is _________ ________ (adverse OR favourable)
$12,000, $18,000, $48,000, $4,500
The materials usage variance is ________ _________(adverse OR favourable)
$1500, $30,000, $6000, $7500
(6 marks)
Question 2(b)
Beech Ltd cruelty uses absorption costing, nut is considering changing to marginal costing.
Which of the following variances would change as a result? (Select all that apply)
(2 marks)

 Sales price variance

 Fixed overhead expenditure variance
  Materials price variance
 Materials usage variance
 Sales volume variance
Question 2(c)
Which of the following could be reasons for having an adverse labour efficiency variance?
(2 marks)

 Paying labour a higher rate per hour

 Using lower grade material
 Employing lower- skilled workers
 Employing higher- skilled workers
Question 3 (a)
Cheery Ltd sells books over the internet
Sales (all on credit) $500,000
Purchases on credit $200,000
Operating profit $40,000
Capital employed $200,000
Average receivable $30,000
Average payables $16,000
.
Number of books sold 60,000
Number of books returns 1200
Number of on-time deliveries 58,200
Number of website visits 6,000,000
(a) Calculate the Return on Capital Employed (to the nearest %)
(1 mark)
(b) Calculate the operating profit margin (to the nearest %)
(1 mark)
(c) Calculate the asset turnover (1 mark)
(d) Assuming 365 days in a year.
 Calculate the receivables days (to the nearest day) (1 mark)
(e) Assuming 365 days in a year, calculate the payables days (to the nearest day) (1 mark)
(f) Calculate the % of books returned (to the nearest %) (1 mark)
(g) Calculate the % of books delivered on-time (to the nearest %) (1 mark)
(h) Calculate the % of website visits converted into sales (to the nearest %)
Question 3 (i)
Cheery Ltd sells books over the internet.
Attached is information relating to last year (above)
It is important to consider non- financial measures in addition to financial measures, for which
of the following reasons? (Select all that apply) (2 marks)

 Customers are interested in receiving the information

 They are better indicators of future performance
 They help to explain the past levels of profitability
 They help to identify areas where the company needs to improve

Answers
Qu 1(a) equal to 53610

1(b) equal to 21

1(c) 3.33 years

1(d) positive

Qu 2 (a) $12,000 favourable

$7,500 adverse

2(b) sales volume variance

2(c) using lower grade materials, Employing lower-skilled workers

Qu 3(a) equal to 20

3(b) equal to 8

3(c) equal to 2.5(adverse OR favourable)

3(d) equal to 22

3(e) equal to 29

3(f) equal to 2

3 (g) equal to 97

3(h) equal to 1

3(i) They are better indicators of future performance , They help to identify areas where the company needs to improve