Mark Scheme

SERIES 2-2015
Results

Pearson LCCI (ASE3003) Level 3

Advanced Business Calculations
LCCI Qualifications

LCCI qualifications come from Pearson, the world’s leading learning company.
We provide a wide range of qualifications including academic, vocational,
occupational and specific programmes for employers. For further information,
please visit our website at http://qualifications.pearson.com/lcci.

Pearson: helping people progress, everywhere

Our aim is to help everyone progress in their lives through education. We believe
in every kind of learning, for all kinds of people, wherever they are in the world.
We’ve been involved in education for over 150 years, and by working across 70
countries, in 100 languages, we have built an international reputation for our
commitment to high standards and raising achievement through innovation in
education. Find out more about how we can help you and your students at:
www.pearson.com/uk

All the material in this publication is copyright

© Pearson Education Ltd 2015

ASE3003
2_15
General Marking Guidance

• All candidates must receive the same treatment. Examiners must mark the
first candidate in exactly the same way as they mark the last.

• Mark schemes should be applied positively. Candidates must be rewarded

for what they have shown they can do rather than penalised for omissions.

• Examiners should mark according to the mark scheme not according to

their perception of where the grade boundaries may lie.

• There is no ceiling on achievement. All marks on the mark scheme should

be used appropriately.

• All the marks on the mark scheme are designed to be awarded. Examiners
should always award full marks if deserved, i.e. if the answer matches the
mark scheme. Examiners should also be prepared to award zero marks if
the candidate’s response is not worthy of credit according to the mark
scheme.

• Where some judgement is required, mark schemes will provide the

principles by which marks will be awarded and exemplification may be
limited.

• When examiners are in doubt regarding the application of the mark scheme
to a candidate’s response, the team leader must be consulted.

• Crossed out work should be marked UNLESS the candidate has replaced it
with an alternative response.

ASE3003
2_15
Question Answer Mark
Number
1 (a) (i) Opening balance = £2,823.28 + £2,580.00 = £5,403.28 Cr (A1)

Question Answer Mark

Number
Deposit made on 25 September = £2,810.78 – (£176.72)
1 (a)(ii) (A1)
= £2,987.50

Question Answer Mark

Number
1 (b) Interest per day = 1.5% / 365 = 0.004109589% (M1)

Number of days = 5 days (M1)

Interest = 0.004109589% x 5 x £2,810.78 (M1)

= £0.578 (A1)

Question Answer Mark

Number
Interest charged = £176.72 x 14 x 8% / 365 = £0.5423
1 (c) (M1 A1)
= £0.542

Question Answer Mark

Number
1 (d) Interest earned 4 September to 12 September

= £2,823.28 x 8 days x 1.5% / 365 = £0.928 (M1)

Final balance
= £2,810.78 + £0.666 + £0.928 - £0.542 + £0.578 (M1)
= £2,812.41 (A1)

Question Answer Mark

Number
1 (e) Charge as a multiple = £30 / £0.5423 = 55.3 (M1 A1)

Total for Question 1 – 13 marks

ASE3003
2_15
Question Answer Mark
Number
2 (a) Number of units purchased = £130,000 / £65 = 2,000 (M1 A1)

Question Answer Mark

Number
Percentage yield per annum = £10,920 / (£130,000 x 3)
2 (b) (M1 A1)
= 2.8%

Question Answer Mark

Number
2 (c) Income per unit = £10,920 / 2,000 = £5.46 (M1 A1)

Question Answer Mark

Number
Total charges = (0.1% + 0.2%) x £130,000 + £1,040
2 (d) (M1 A1)
= £1,430

Question Answer Mark

Number
2 (e) Total charges per cent = £1,430 / £130,000 = 1.1% (M1 A1)

Question Answer Mark

Number
2 (f) Net income = £10,920 – £1,430 = £9,490 (M1 A1)

Total for Question 2 – 12 marks

ASE3003
2_15
Question Answer Mark
Number
3 (a) (i) Contribution per unit = £275 - £145 = £130 (A1)

Question Answer Mark

Number
3 (a)(ii) Break even = £715,000 / £130 = 5,500 units (M1 A1)

Question Answer Mark

Number
3 (b) Break-even chart:
Scales from 0 to 2500 units, and from £0, covering half or (A1)
more of the page area.
Two straight lines, one starting at (0 units, £0), one (A1)
starting at (0 units, £154,000)
Both lines correct, from 0 units to 2,500 units or more. (A1)

Question Answer Mark

Number
3 (c) (i) 1,400 units (A1)

Question Answer Mark

Number
3 (c) (ii) £420,000 (A1)

ASE3003
2_15
Question Answer Mark
Number
3 (c) (iii) £66,000 shown on chart (M1 A1)

Question Answer Mark

Number
3 (c) (iv) 900 units shown on chart (M1 A1)

Total for Question 3 – 12 marks

ASE3003
2_15
Question Answer Mark
Number
Current ratio = Current assets = 26,520 = 2.4 : 1
4 (a) (i) (M1 A1)
Current liabilities 11,050

Question Answer Mark

Number
4 (a)(ii) Borrowing ratio = Total borrowings = 93,800 = 0.56 (M1 A1)
Net worth 167,500
OR:
Borrowing ratio = Total borrowings = 93,800 = 0.36
Net worth + mortgage 261,300

Question Answer Mark

Number
4 (a)(iii) Fixed assets = £261,300 - £15,470 = £245,830 (M1 A1)

Question Answer Mark

Number
Gross profit = Net sales – COGS = £490,000 – £341,000
4 (b) (i) (M1 A1)
= £149,000

Question Answer Mark

Number
4 (b) (ii) Net purchases = COGS – opening stock + closing stock (M1)

= £341,000 – £24,500 + £19,500 = £336,000 (A1)

Question Answer Mark

Number
4 (b) (iii) Average stock = ½(24,500 + 19,500) = £22,000 (M1)

Rate of stock turnover = £341,000 / £22,000 = 15.5 (M1 A1)

Total for Question 4 – 13 marks

ASE3003
2_15
Question Answer Mark
Number
5 (a) Amount remaining after 2 years
= £6,000,000 – £2,000,000 – £2,500,000 = £1,500,000 (M1)

Proportion of year 3 inflow = £1,500,000 / £3,000,000 (M1)

= 0.5

Payback period = 2 years 6 months (A1 A1)

Question Answer Mark

Number
The investor can proceed with Project P, as the payback
5 (b) (A1 A1)
period is less than 3 years.

Question Answer Mark

Number
5 (c) Gross return per annum = £25,800,000 / 6 = £4,300,000 (M1)

Net return per annum = £4,300,000 – £850,000 (M1)

= £3,450,000

Average rate of return = £3,450,000 / £15,000,000 = 0.23 (M1 A1)

= 23%

Question Answer Mark

Number
5 (d) Internal rate of return
= (£50,000 x 0.08) – (-£150,000 x 0.07) = 0.0725 = 7.25% (M1 A1)
£50,000 – (-£150,000)

Total for Question 5 – 12 marks

ASE3003
2_15
Question Answer Mark
Number
6 (a) (i) Total liabilities = £403,000 + £450,000 = £853,000 (A1)

Question Answer Mark

Number
Assets available for unsecured creditors
6 (a) (ii) (M1 A1)
= £520,000 - £403,000 = £117,000

Question Answer Mark

Number
Rate in £ paid to unsecured creditors
6 (a) (iii) (M1 A1)
= £117,000 / £450,000 = £0.26 per pound

Question Answer Mark

Number
6 (a) (iv) Paid to unsecured creditor = £22,100 / 0.26 = £85,000 (M1 A1)

Question Answer Mark

Number
Total assets as a percentage of the total liabilities
6 (a) (v) (M1 A1)
= £520,000 / £853,000 = 61%

Question Answer Mark

Number
6 (b) Total owed to secured creditors = £690,000 - £350,000 (M1)
= £340,000

Assets available for unsecured creditors

= £350,000 x 0.41 = £143,500 (M1)
Total assets available for creditors (M1 A1)
= £340,000 + £143,500 = £483,500

Total for Question 6 – 13 marks

ASE3003
2_15
Question Answer Mark
Number
7 (a) (i) Total amount to be written off
(A1)
= £135,000 - £15,000 = £120,000

Question Answer Mark

Number
Amount to be written off in the first year
7 (a)(ii) (A1)
= £120,000 / 5 = £24,000

Question Answer Mark

Number
7 (a) (iii) Book value after one year £135,000 - £24,000 = £111,000 (M1 A1)

Question Answer Mark

Number
Accumulated (total) depreciation after three years
7 (a) (iv) (M1 A1)
= 3 x £24,000 = £72,000

Question Answer Mark

Number
7 (b) In the final 3 years, the depreciation of Machine B is (M1)
£111,000 - £15,000 = £96,000

Depreciation per annum = £96,000 / 3 = £32,000 (M1)

Original cost of Machine B = £111,000 + £32,000 (M1 A1)

= £143,000

Question Answer Mark

Number
Book value of Machine C after 2 years
7 (c) (M1 A1)
= £150,000 x (1 – 0.44)2 = £47,040

Total for Question 7 – 12 marks

ASE3003
2_15
Question Answer Mark
Number
8 (a) Chain base index:

2013 index = 100 x 110.4 / 115.0 = 96.0 (M1 A1)

2014 index = 100 x 115.0 / 110.4 = 104.17 = 104.2 (A1 A1r)

Question Answer Mark

Number
8 (b) Number of items costing $4.95
= 300 – (100 + 80 + 50) = 70 (M1)

Items Unit cost Total ($) (M1)

100 5.13 513.00
80 5.01 400.80
50 4.98 249.00
70 4.95 346.50
1,509.30
(M1 A1)
Average cost per item = $1,509.30 /300 = $5.031

Question Answer Mark

Number
8 (c) (i) Total cost = (50 + 40) x £3.56 = £320.40 (M1 A1)

Question Answer Mark

Number
8 (c) (ii) Total cost of the further 40 units
= £320.40 – (50 x £3.60) = £140.40 (M1)

Cost per unit = £140.40 / 40 = £3.51 (M1 A1)

Total for Question 8 – 13 marks

Total for Paper – 100 marks

ASE3003
12 2_15