Pearson LCCI

Certificate in Advanced
Business Calculations
Level 3

Friday 27 March 2015

Time: 3 hours

Paper Reference

ASE3003/2
15

You will need:

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.

The marks for each question are shown in brackets

use 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 carefully if you have time at the end.

P46988A
2015 Pearson Education Ltd.

1/1/1/1/
1

*P46988A*

Turn over

Answer ALL questions.

1 Miss Marshall has a bank account on which simple interest is
earned at 1.5% per annum on credit balances (Cr). The bank
charges simple interest at 8% per annum on debit balances (Dr).
Interest is calculated at the end of each day on the current balance at
a daily rate of interest that is 1/365 of the annual rate, and credited or
debited to the account at the end of the month.
The account for September is shown below.
Date

Details

31 Aug

Balance c/f

Debit

Credit

Balance

4 Sept

Cheque

2,580.00

2,823.28 Cr

12
Sept
26
Sept

Cheque

3,000.00

176.72 Dr

Deposit

2,810.78 Cr

The balance at the end of September (length 30 days), before

interest, is 2,810.78 in credit.
(a) Calculate the:
(i) opening balance carried forward from 31 August
(1)
(ii) amount of the deposit made on 26 September.
(1)
(b)Show that the interest earned from the 26 September deposit
to the end of September is 0.58, and provide a more
accurate figure.
(c) Calculate the interest charged for the period in September when
the account was in debit.

(4)

(2)

The interest earned for the first 3 days of September is 0.666

(d)Calculate the balance at the end of September (length 30 days)
after interest is paid and charged.

(3)

The bank charges 30 for writing a letter to Miss Marshall (on 1

October) telling her that she has been overdrawn.
(e) Calculate this charge as a multiple of the interest charged for
the period in September when the account was in debit.
) (Total for Question 1 =
13 marks)
2

(2

P46988A

2 Gavin bought unit trusts and invested for income. He invested

130,000 in a unit trust with an offer price of 65 per unit, and sold
the units after 3 years at the same price. During this period he
received income from the units of 10,920. This income was not
reinvested in units.
Calculate the:
(a) number of units purchased
(2)
(b) percentage yield per annum
(2)
(c) income per unit for the whole 3-year period.
(2)
Gavin paid the following charges for the unit trusts:
Fee on purchase: 0.1% of the sum invested on purchase
Fee on sale: 0.2% of the sum received on sale
Fund management fees of 1,040
Calculate:
(d) the total charges paid
(2)
(e) the total charges as a percentage of the original investment
(2)
(f) Gavins net income.
(2
) (Total for Question 2 =
12 marks)

P46988A

Turn
over

BLANK
PAGE

P46988A

3 Manufacturer A sells Product P for 275 per unit. Manufacturing costs are as
follows:
Fixed costs per period 715,000
Variable costs

145 per unit

(a) Calculate the:

(i) contribution per unit
(1)
(ii) break-even point in units produced and sold.
(2)
Manufacturer A sells Product Q for 300 per unit. Manufacturing costs are as
follows:
Fixed costs per period 154,000
Variable costs

190 per unit

(b)Draw a break-even chart for Product Q, to an appropriate scale.

Your chart should cover production (output) from 0 units per period
to 2,500 units per period.

(3)

(c) Show clearly on your chart the:

(i) output (units) for break even
(1)
(ii) total manufacturing cost for break even
(1)
(iii) profit for an output of 2,000 units
(2)
(iv) output for a loss of 55,000
(2
) (Total for Question 3 =
12 marks)

P46988A

Turn
over

4 (a) The Balance Sheet of Retailer A at the end of the first year of
trading is shown below.
Balance Sheet as at 31
December Year 1

Fixed Assets

Figure
omitted

Current Assets

Stock
Debtors

9,500
14,490

Bank

2,035

Cash

495

26,520

Amounts due within 12

months
trade creditors
Net Current Assets

11,050
15,470

261,300
Amount due after 12 months
mortgage on premises

(93,800)
167,500

Using the above figures from the Balance Sheet, calculate for Retailer
A the:
(i) current ratio
(2)
(ii) borrowing ratio (capital gearing ratio)
(2)
(iii) fixed assets.
(2)

P46988A

(b) During 2014 the following information relates to Retailer B.

Net sales

490,000

Cost of goods sold

341,000

Opening stock

24,500

Closing stock

19,500

Calculate the:

(i) gross profit

(2)

(ii net purchases

)

(2)

(iii) rate of stock turnover (stockturn) per annum.

(3
) (Total for Question 4 =
13 marks)

P46988A

Turn
over

5 The estimated costs and returns for investment Project P are as follows.

6,000,000

Cost
Year 1
inflow
Year 2
inflow
Year 3
inflow
Year 4
inflow

net cash

2,000,000

net cash

2,500,000

net cash

3,000,000

net cash

1,500,000

(a) Calculate the payback period of Project P in years and months.

(4)
The potential investor for Project P requires a payback period of three
years or better.
(b) Advise the potential investor for Project P. You must give a reason for
your advice.
(2)
The investor estimates the following figures for an investment in Project
Q:
Initial cost of project

15,000,0
00
6 years

Expected life of project

Total return before allowing for repairs and
maintenance
Average cost per annum of repairs and
maintenance

25,800,0
00
850,000

(c) Calculate the expected average rate of return of Project Q.

(4)
Investment Project R is estimated to have a net present value of
50,000 at a discount factor of 7% and a net present value of negative
150,000 at a discount factor of 8%.
(d) Calculate the internal rate of return of Project R.
(2
) (Total for Question 5 =
12 marks)

P46988A

6 The following table summarises the bankruptcy of two companies.

Company

Assets
Total assets available for creditors

520,000

Liabilities
Total owed to secured creditors
Total owed to unsecured creditors
Total liabilities

403,000
450,000
?

?
350,000
690,000

?
?

?
0.41

Distribution of Assets
Assets available for unsecured creditors
Rate in the pound paid to unsecured creditors
(a) Calculate, for Company A, the:

(i) total liabilities

(1)

(ii assets available for unsecured creditors

)

(2)

(iii) rate in the pound paid to unsecured creditors

(2)
(iv) amount owed to an unsecured creditor who is paid 22,100
(2)
(v) total assets as a percentage of the total liabilities.
(2)
(b) Calculate, for Company Z, the total assets available for creditors.
(4
) (Total for Question 6 =
13 marks)

P46988A

Turn
over

7 Manufacturer M buys two machines, A and B. Machine A costs

135,000 and is estimated to have a life of five years and a scrap
value of 15,000. It is depreciated by the equal instalment (straight
line) method.
(a) Using the equal instalment method, calculate the:
(i) total amount to be written off over the lifetime of the machine
(1)
(ii) amount to be written off in the first year
(1)
(iii) book value after one year
(2)
(iv) accumulated depreciation after three years.
(2)
Machine B is depreciated by the equal instalment method over four
years. It has the same scrap value of 15,000 as Machine A. It also
has the same book value at the end of one year as Machine A.
(b) Calculate the original cost of Machine B.
(4)
Manufacturer N buys Machine C for 150,000 and depreciates it by
the reducing balance (diminishing balance) method with an
annual rate of depreciation of 44%.
(c) Calculate the book value of Machine C after two years.
(2
) (Total for Question 7 =
12 marks)

10

P46988A

8 An index of production had the following values over the period 2011
to 2014, with 2011 as the base year.
2011
100.0

2012
115.0

2013
110.4

2014
115.0

(a) Calculate these indices as a chain base index. Give your answers to
an appropriate degree of accuracy.

(4)

(b) Calculate the weighted average cost per item on a purchase of

300 items, where: 100 of the items cost $5.13 each
80 of the items cost $5.01 each
50 of the items cost $4.98 each
the remaining items cost $4.95 each.
(4
)

(c) Kelly purchased 50 units of Product A at 3.60 each, and a

further 40 units of Product A at a different price per unit. The
average cost per unit was 3.56 Calculate the:
(i) total cost to Kelly
(2
)

(ii) cost per unit of the further 40 units.

(3
) (Total for Question 8 =
13 marks)

TOTAL FOR PAPER = 100

MARKS

11

P46988A

BLANK
PAGE

12

P46988A