Pearson LCCI

Certificate in Advanced
Business Calculations
Level 3
Friday 17 November 2017 Paper Reference

Time: 3 hours ASE3003

You must have:
An answer book

Instructions
• Do not open this examination paper until you are told to do so by the supervisor.
• Use 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
• The total mark for this paper is 100.
• There are eight questions in this question paper.
• –Theusemarks for each question are shown in brackets
this as a guide as to how much time to spend on each question.
• You may use mathematical and statistical tables.
• You 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
• Read each question carefully before you start to answer it.
• Check your answers if you have time at the end. Turn over

*P54352A*
P54352A
©2017 Pearson Education Ltd.

1/1/1/1
 Answer ALL questions.
1 A car factory owner buys two machines.
The first machine makes steering wheels and costs RM875,000 (Malaysian Ringgit).
It is estimated to have a life of 5 years and a scrap value of RM35,000
Using the equal instalment method:
(a) Calculate the percentage of the cost that must be written off over the life of the
machine.
(3)
(b) Prepare a depreciation schedule for the life of the machine that shows:
• the annual depreciation
• the accumulated depreciation at the end of each year
• the book value at the end of each year.
(5)
The second machine makes windscreens and is depreciated by the equal instalment
method over 7 years. It has the same scrap value as the first machine. It also has the
same book value at the end of one year as the first machine.
(c) Calculate the original cost of the second machine.
(4)

(Total for Question 1 = 12 marks)

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2 A washing machine company can manufacture its latest model by two methods of
production.
Using Method P, fixed costs are $4,450,000 (US Dollars) per period and variable costs
are $355 per unit of product.
Using Method Q, fixed costs are $3,100,000 per period and variable costs are $445 per
unit of product.
The company plans to sell the washing machines at $600 per unit.
(a) Calculate the:
(i) level of output per period for which the total costs for each of the two
methods are the same
(3)
(ii) break-even point in units per period using method Q.
(3)
The company chooses method P and predicts sales of 35,000 units per period.
(b) Calculate how much more profit per period will be made using method P rather
than using method Q at this level of production and sales.
(4)
(c) For production and sales per period of more than 35,000 units, state whether
the difference in profit between the two methods will be greater or less than the
answer to (b), and give a reason.
(2)

(Total for Question 2 = 12 marks)

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3 The following information relates to a Japanese retailer’s business at the end of the
first year of trading (figures are shown in Japanese Yen, ￥).
￥

Annual sales 262,500

Annual purchases 118,710
Sales returns 5,625
Purchases returns 3,655
Initial stock value 16,500
Final stock value 19,530
General expenses 7,890
Postage 1,960
Telephone 2,440
Advertising 12,585
Van expenses 9,105

(a) Calculate the:

(i) cost of goods sold
(3)
(ii) gross profit as a percentage of net sales
(3)
(iii) overhead expenses as a percentage of net sales
(2)
(iv) average length of time that items remain in stock, giving your answer in days
(3)
(v) difference between gross profit and overhead expenses.
(1)
(b) State what the answer to (a)(v) above represents.
(1)

(Total for Question 3 = 13 marks)

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4 Sales indices for a bakery supplier at January 2017 are shown below.

Index
Item Weight
(Jan 2010 = 100)

Eggs 137 141.0

Flour 94 101.7

Sugar 219 130.5

(a) Calculate the overall weighted index of sales at January 2017, with
January 2010 = 100, for all items together. Give your answer correct to two
decimal places.
(5)
XS Eggs Ltd sold 61,400 batches of doughnuts in 2015 and 85,960 batches in 2016.
(b) Calculate the quantity relative of batches sold for 2016 with 2015 as the base year.
(2)
A competitor, Sugary Snowballs Ltd, sold the same product at a price of S$3.80 per
batch in 2015 and S$4.37 per batch in 2016 (currency is Singapore Dollars).
(c) Calculate the price relative for 2016 with 2015 as the base year.
(2)
The following table shows the price per batch (in S$) and sales of batches of
doughnuts for both companies in 2015 and 2016.

2015 2016

XS Eggs Sugary Snowballs XS Eggs Sugary Snowballs

Price Sales Price Sales Price Sales Price Sales

7.99 61,400 3.80 57,500 7.45 85,960 4.37 69,000

(d) Calculate an index of sales revenue for each company for 2016 with 2015 as the
base year.
(4)

(Total for Question 4 = 13 marks)

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5 A business owner in Brunei has a choice of two investment projects. The estimated
costs and returns, in Brunei Dollars, B$, are as follows:
Project One Project Two
B$ B$
Cost 140,000 195,000
Year 1 cash inflow/(outflow) 40,000 (15,000)
Year 2 cash inflow 60,000 120,000
Year 3 cash inflow 60,000 120,000
Year 4 cash inflow 40,000 40,000
The payback period for Project One is 2 years 8 months.
(a) Calculate the payback period for Project Two. Give your answer in years and
months.
(3)
Applying discounted cash flow techniques, the project chosen must earn a return of
at least 15%.
(b) Calculate the net present value for Project Two, using the following table:
Discounting factor 15%
Year 1 0.870
Year 2 0.756
Year 3 0.658
Year 4 0.572
(4)
Using the same discounting factor, Project One has a positive net present value of
B$2,520
(c) Multiple choice question
Read the statements below. Which three statements would you use to advise the
business owner?
A Project One has lower overall cash inflows than Project Two. Therefore the
business owner should proceed with Project Two.
B Project Two has the longer payback period of the two, so should be selected.
C Project One has a positive net present value based on a discount rate of 15%.
Therefore, the project has a rate of return higher than 15%. The business
owner should proceed with this project.
D Project Two has a negative NPV. Therefore the project has a rate of return
lower than 15%. The business owner should not proceed with Project Two.
E The business owner should choose Project Two as the cash inflows are greater
than the cash outflows for this project.
F The IRR (Internal Rate of Return) for each project indicates that Project One
alone should be accepted.
(3)

(Total for Question 5 = 10 marks)

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6 The following information relates to the business of a bankrupt Australian trader, in
Australian Dollars, AU$.
AU$
Cash in hand 445
Trade creditors 40,025
Value of machinery 9,500
Bank overdraft 11,000
Trade debtors 7,614
Value of stock 3,500
Value of office equipment 3,750
Value of vehicles 3,800
(a) Calculate the trader’s total assets and total liabilities.
(4)
Secured debts are the bank overdraft and AU$5,000 of the amount owed to trade
creditors.
(b) Calculate the:
(i) rate in the AU$ that an unsecured creditor will receive
(4)
(ii) amount owed to an unsecured creditor who receives AU$3,456
(2)
(iii) amount paid to a creditor who is owed AU$6,200 of which half is secured
(3)
(iv) amount owed to a creditor as a secured debt, whose total owed is AU$4,340
and who is paid AU$2,100.
(3)

(Total for Question 6 = 16 marks)

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7 Yi Ling has a number of investments. Each one earns compound interest, calculated
annually. She makes a table of her investments as follows, rounding figures to the
nearest Malaysian Ringgit.

Investment A Investment B Investment C Investment D

Sum invested RM60,000 RM40,000 ? ?

Rate of interest per

3.00% 4.50% 3.50% 4.00%
annum

Time invested (years) 5 3 ? 7

Final amount
RM69,556 ? RM91,802 RM131,593
(Principal + interest)

Interest earned RM9,556 ? RM11,802 ?

Copy the table into your answer book and then complete the table.

(Total for Question 7 = 13 marks)

8 In Myanmar, K100 (Kyat) of 4¼% debenture stock can be bought for K86
Interest is paid half yearly. A bank invested K1,505,000 in the stock.
(a) Calculate the nominal value of the stock bought by the bank.
(2)
The bank held the stock for 3½ years.
(b) Calculate the:
(i) total interest received over this period
(2)
(ii) interest only percentage yield over this period.
(2)
Alternatively, the bank could have invested the K1,505,000 in a unit trust with an offer
price of K50 per unit, and sold the units after 3½ years at K58.75 per unit. No dividend
is paid during the 3½ years.
(c) Calculate the:
(i) number of units that could have been purchased by the bank
(2)
(ii) average annual percentage increase in the value of the units.
(3)

(Total for Question 8 = 11 marks)

TOTAL FOR PAPER = 100 MARKS

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