Pearson LCCI

Certificate in Advanced
Business Calculations
Level 3
Thursday 5 November 2015 Paper Reference

Time: 3 hours ASE3003

You will need:
An answer book

Instructions
•• Use
Do not open this examination paper until you are told to do so by the supervisor.
black/blue ink or ball-point pen
– pencil can only be used for graphs, charts, diagrams, etc.
• Ensure your answers are written clearly.
• Begin your answer to each question on a new page.
• Write on both sides of the page.
• All answers must be correctly numbered but need not be in numerical order.
• If you need more space, use the additional sheets provided. Write your name,
candidate number and question number on each sheet and attach them to the
inside of your answer book. State, on the front of your answer book, the number
of additional sheets attached.
•
•
Answer all questions.
Workings must be shown.

Information
•• TTheheretotalaremark for this paper is 100.
eight questions in this question paper.
• T–heusemarks for each question are shown in brackets
this as a guide as to how much time to spend on each question.
•• Y Youou may use mathematical and statistical tables.
may use a calculator provided the calculator gives no printout, has no
word display facilities, is silent and cordless. The provision of batteries and their
condition is your responsibility.

Advice
•• RCead each question carefully before you start to answer it.
heck your answers carefully if you have time at the end.
Turn over

P47034A
©2015 Pearson Education Ltd.

1/1/1/1/1
*P47034A*
 Answer ALL questions.
1 Investor A invests £170,000 in Investment Account B and receives interest,
compounded six-monthly, at a rate of 3% per six months.
(a) Calculate the:
(i) amount in the account after four years
(3)
(ii) portion of this amount that is interest, expressed as a percentage of the
investment
(3)
(iii) annual rate of simple interest that would produce the same amount of
interest over this period.
(2)
A bank successfully tenders $484,000 for a $500,000 Treasury bill that runs for six
months and is to be redeemed at par.
(b) Calculate the rate of simple interest per annum received on this investment.
(4)

(Total for Question 1 = 12 marks)

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2 Elena purchased units in Unit Trust C at £160 per unit and sold the units after
4½ years at £205 per unit.
(a) Calculate the increase in the price of the units as a percentage increase per
annum, based on simple interest.
(2)
Elena also bought 11,000 units in Unit Trust D and sold them later at £15.12 each, the
total amount received being £23,100 more than the original cost.
(b) Calculate the original amount Elena paid per unit.
(3)
Elena purchased debenture stock as follows:
Nominal value of stock purchased £60,000
Amount invested £53,700
Rate of interest on nominal value of stock 3.75% per annum
Elena later estimated that, over the period of time that she held the stock, she earned
interest of just over 12½% of her investment.
(c) Calculate:
(i) the cost of £100 of debenture stock
(2)
(ii) the interest received per annum
(2)
(iii) 12½% of her investment
(2)
(iv) the number of years she held the stock.
(2)

(Total for Question 2 = 13 marks)

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3 Product A has unit costs of production during a trading period as follows:
Fixed (£) Variable (£)
Production overheads ? 0
Distribution expenses 12 36
Labour ? 68
Materials 0 62
(a) Calculate, for Product A, the:
(i) total distribution expenses per unit in this trading period
(1)
(ii) fixed distribution expenses as a fraction of the total distribution expenses.
(2)
The total of all fixed and variable costs per unit in this trading period is £230.
The total cost of labour per unit in this trading period is £85.
(b) Calculate, for Product A in this trading period, the:
(i) fixed cost of labour per unit
(1)
(ii) production overheads per unit
(2)
(iii) total variable costs as a percentage of the total of all fixed and variable costs.
(3)
In the same trading period, Product B has variable costs of labour per unit of £78.
This figure is 65% of the total cost of labour per unit for this product.
(c) Calculate the total cost of labour per unit for Product B in this trading period.
(2)

(Total for Question 3 = 11 marks)

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4 At the end of the year 2014, the following information applied to Company X:
Current liabilities £19,200,000
Current ratio 2.3 : 1
Acid test ratio 1.1 : 1
(a) Calculate, for Company X, the:
(i)
current assets
(2)
(ii) stock held at that time.
(2)
(b) Give one reason why you think the liquidity of Company X is healthy, based on
the current ratio.
(1)
(c) Explain why an acid test ratio of 1 : 1 or better is considered healthy.
(1)
During 2014, the following information related to Trader Y:
£
Net sales 1,540,000
Cost of goods sold 1,095,000
Opening stock 65,000
Closing stock 61,000
Overhead expenses 204,000
(d) Calculate, for Trader Y, the:
(i)
net profit
(3)
(ii)
net purchases
(2)
(iii) average number of days that items remained in stock
(assume 1 year = 365 days).
(3)

(Total for Question 4 = 14 marks)

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5 The estimated revenue returns for Investment Project P are as follows:
£1,300,000 in year 1
£2,000,000 in each of the years 2 to 7
£0 in year 8 and subsequent years.
The repair and maintenance costs are expected to be £250,000 in each of the first
seven years.
(a) Calculate, for Investment Project P, the:
(i) estimated revenue return net of repair and maintenance costs in year 1
(1)
(ii) total estimated revenue returns net of repair and maintenance costs for the
first seven years
(2)
(iii) average estimated revenue returns net of repair and maintenance costs over
the first seven years.
(2)
Investor A calculates the average rate of return of Investment Project P to be
22%, based on an estimated life of seven years. The calculation he used is average
estimated revenue returns net of repair and maintenance costs, divided by the initial
cost of the project.
(b) Calculate the initial cost of Investment Project P.
(2)
Investor A calculates the net present value of Investment Project Q to be £280,000 at
a discount factor of 10%, and £80,000 at a discount factor of 12%.
(c) Calculate the internal rate of return of Investment Project Q, using the figures
from Investor A.
(2)
Investor B calculates the net present value of Investment Project Q to be £80,000 at a
discount factor of 12%, and (£30,000) at a discount factor of 13%.
(d) Calculate the internal rate of return of Investment Project Q, using the figures
from Investor B.
(2)
Investor A calculates the payback period of Investment Project R to be six years and
eight months, based on an initial cost of £2,500,000 and a net cash inflow of £400,000
in each of the first six years.
(e) Calculate the expected net cash inflow in year 7.
(3)

(Total for Question 5 = 14 marks)

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6 Bankrupt Trader T owed £15,200 to secured creditors and £279,800 to unsecured
creditors.
The assets of the business realised £94,400.
(a) Calculate the business assets as a percentage of the liabilities.
(3)
The cost of winding up the business was £9,250 and this is an additional secured
expense.
(b) Calculate the:
(i) total now owed to secured creditors
(1)
(ii) total paid to secured creditors
(1)
(iii) total paid to unsecured creditors
(2)
(iv) dividend paid to unsecured creditors, expressed as a rate in the pound
(2)
(v) amount paid to an unsecured creditor who is owed £17,820.
(2)

(Total for Question 6 = 11 marks)

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7 Factory Machine F is depreciated by the equal instalment method.
The book value of Factory Machine F is £580,000 at the end of year 1, and is £160,000
at the end of year 4.
(a) Calculate, for Factory Machine F, the:
(i)
annual depreciation
(2)
(ii)
initial cost
(2)
(iii) estimated scrap value at the end of year 5.
(2)
Factory Machine M is depreciated by the diminishing balance method.
The book value of Factory Machine M is £580,000 at the end of year 1, and is £160,000
at the end of year 4.
(b) Calculate, for Factory Machine M, the:
(i) annual rate of depreciation
(4)
(ii) book value at the end of year 2
(2)
(iii) estimated scrap value at the end of year 9.
(2)

(Total for Question 7 = 14 marks)

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8 Company A sells 30,000 units of Item B at £4.80 per unit in 2012, and 36,000 units of
Item B at £6.00 per unit in 2013.
(a) Calculate the following values for Item B for 2013 with 2012 as the base year:
(i) quantity relative for unit sales
(2)
(ii) price relative for unit prices
(2)
(iii) index of total sales value.
(2)
The index for unit sales of Item B for 2014 with 2013 as the base year is 115.
(b) (i) Calculate the unit sales of Item B for 2014.
(2)
(ii) Write out the chain base index for unit sales of Item B for the years 2013 and
2014.
(1)
The price relative for unit prices of Item B for Company A for 2012 with 2000 as the
base year is 1.6
(c) Calculate the unit price of Item B in the year 2000.
(2)

(Total for Question 8 = 11 marks)

TOTAL FOR PAPER = 100 MARKS

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