Series 2 Examination 2009

CERTIFICATE IN ADVANCED BUSINESS CALCULATIONS

Level 3
Friday 3 April
Subject code: 3003
Time allowed: 3 hours

INSTRUCTIONS FOR CANDIDATES

Answer all 8 questions.

Write your answers in blue or black ink/ballpoint. Pencil may be used only for graphs, charts,
diagrams, etc.

All answers must be correctly numbered but need not be in numerical order.

You must show all calculations, where applicable on the answer paper provided.

You may use mathematical and statistical tables.

Your work should be accurate and neat.

Your 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.

3003/2/09

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ASE 3003 2 09 1

QUESTION 1
Simone has a bank account on which simple interest is earned at 2% per annum on credit
balances. The bank charges simple interest of 6% per annum on debit balances.
Interest is calculated at the end of each day on all balances and paid/earned at the end of the month.
Simones bank statement for April 2008 is shown below. Two of the balance figures are omitted.
Date
31 Mar/1 Apr
7 Apr
20 Apr
25 Apr
(a) Calculate

Details
Balance b/f
Cheque
Cheque
Cheque

Debit

Credit

327.41
2,499.00
3,654.50

Balance

?
1,808.12 Cr
?
2,963.62Cr

(i) the balance brought forward from 31 March

(2 marks)

(ii) the balance at the end of the period 20 April to 24 April.

(2 marks)

(b) Giving your answer correct to four significant figures, calculate the percentage rate of interest
per day payable by the bank to Simone on credit balances.
(2 marks)
Simone uses the products method to check the interest she receives from the bank.
(c) Calculate the interest received by Simone for the period from 7 April to 19 April inclusive.
(2 marks)
Simones house increases in value from 105,000 to 185,000 over a period of 10 years.
(d) Calculate the steady rate of compound interest that this represents.

(4 marks)
(Total 12 marks)

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QUESTION 2
Company A issued 150,000 shares and sold them at 4.50 each.
(a) Calculate the amount raised.

(2 marks)

Some time later, the 150,000 shares were valued at 817,500 in total.
(b) Calculate the value of one share at that time.

(2 marks)

Investor B bought 120,000 (nominal value) of stock in Company C at 88.50 per 100 block.
(c) Calculate the amount invested.

(2 marks)

Investor B held the stock for 4 years, and received interest of 3% per annum on the nominal value of
the stock.
(d) Calculate:
(i) The total interest earned

(2 marks)

(ii) The total percentage yield on the amount invested.

(2 marks)

Investor D bought 25,000 units in a unit trust and sold them later at 17.52 each, the total amount
being 80,500 more than she bought them for.
(e) Calculate the original amount paid per unit by investor D.

(3 marks)
(Total 13 marks)

QUESTION 3
An industrial product can be manufactured by two different methods of production.
Using Method A, fixed costs are 9,060,000 and variable costs are 19 per unit of product. Using
Method B, fixed costs are 7,920,000.
At an output of 240,000 units, the total costs for Method B are the same as for Method A.
(a) Calculate the variable cost per unit of product for Method B.

(4 marks)

The manufacturer chooses Method A and sets a selling price so that it will break even on production
and sales of 600,000 units.
(b) Calculate the selling price and the contribution per unit of product.
The manufacturer makes a profit of 2,265,000. All units produced are sold.

(4 marks)

(c) Calculate the level of production and sales.

(3 marks)
(Total 11 marks)

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QUESTION 4
The following information relates to the business of Retailer R during a trading year.

Net sales
Cost of goods sold
Initial stock value
Final stock value
Overhead expenses

1,305,000
646,000
39,900
36,100
424,100

Calculate:
(a) net profit as a percentage of net sales

(4 marks)

(b) net purchases

(2 marks)

(c) rate of stockturn per annum

(3 marks)

(d) the average number of days items are held in stock.

(2 marks)

In the same year, the cost of goods sold by Retailer S were 850,000. During the year the retailer
reduced stock by 20,000, and kept items in stock for an average of 14.6 days.
(e) Calculate the value of stock at the end of the year.

(4 marks)

(Total 15 marks)

QUESTION 5
Investor A uses the following formula to calculate the average rate of return (ARR):
ARR = Average return per annum net of repairs and maintenance
Initial cost of project
She estimates the following figures for investment project X:
Initial cost of project

6,400,000

Expected life of project

Total return before allowing repairs and maintenance
Average cost per annum of repairs and maintenance
(a) Estimate the average rate of return of project X.

5 years
10,000,000
208,000
(4 marks)

Investor B uses the same formula and estimates that project Y has an initial cost of 5,000,000, an
expected life of 6 years, a total return before allowing for repairs and maintenance of 9,000,000, and
an average rate of return of 23%.
(b) Calculate the estimated average cost per annum of repairs and maintenance.

(4 marks)

Investor C estimates that the cost of project Z is 8,800,000, and that it will earn a return of
2,400,000 per annum.
(c) Calculate the expected payback period of project Z in years and months.

(3 marks)

(Total 11 marks)

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QUESTION 6
A bankrupt trader owed 29,750 to fully secured creditors and 171,500 to unsecured creditors.
The assets of the business realised 73,500.
Calculate
(a) the ratio of business assets to total liabilities, giving your answer in its lowest terms

(3 marks)

(b) how much was paid to the fully secured creditors

(1 mark)

(c) how much was paid to the unsecured creditors

(2 marks)

(d) how much in the was paid to the unsecured creditors, giving your answer correct to three
figures
(3 marks)
(e) how much was paid to an unsecured creditor who was owed 4,400
(2 marks)
(f)

how much was owed to an unsecured creditor who was paid 51.

(2 marks)
(Total 13 marks)

QUESTION 7
A factory machine that cost 750,000 is depreciated by 55% of its value each year using the
diminishing balance method.
(a)

Prepare a depreciation schedule for the first 2 years that shows, for each year, the yearly
depreciation, the accumulated depreciation and the net book value at the end of the year.

(5 marks)
(b) Calculate the amount of depreciation that occurs during year 6.

(4 marks)

A second machine also costs 750,000, and is depreciated by the equal instalment method with a
lifetime of 5 years and a scrap value of 10,000.
(c) Calculate the net book value at the end of year 3.

(4 marks)

(Total 13 marks)

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QUESTION 8
An index of industrial productivity has the following values over the period 2004 to 2008, with 2004 as
the base year.
2004
2005
2006
100
105.4
109.2
(a) Express these figures as a chain base index.

2007
120.7

2008
115.3
(5 marks)

(b) State the percentage change in industrial productivity from 2007 to 2008.

(2 marks)

(c) Calculate the quantity relative for 2008 with 2006 as the base year.

(2 marks)

(d) Write your answer to (c) as an index.

(1 mark)

The industrial productivity for 2004 was an increase of 8% on the previous year.
(e) Calculate the index figure for 2006 with 2003 as the base year.

(2 marks)
(Total 12 marks)

3003/2/09

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