Mark Scheme

June 2018

PEARSON LCCI (ASE3003) Certificate in

Advanced Business Calculations Level 3
LCCI Qualifications

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Publication code: 58219_ms
© Pearson Education Ltd 2018
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.
Question Answer Mark
Number
1 (a) Total costs of Maxi Method
= RM4,750,000 + (5,000 x RM900) M1
= RM9,250,000
Total variable costs of Cool Method
= 5,000 x 1,300 = RM6,500,000 M1
Fixed costs for Cool Method
= RM9,250,000 - RM6,500,000 M1
= RM2,750,000 A1(4)

Question Answer Mark

Number
1 (b)(i) Graph in Appendix
Marks for correct axes and labelling
- Total costs in Ringgit on y-axis in
[RM0, RM13,000,000)
- Units produced on x-axis in [0, 5,000) A1
Position of intersection
- (5,000, 9,250,000) - accept in ranges 4,500 to A1
5,500 and 9,000,000 to 10,000,000
Intercepts
- 2,750,000 and 4,750,000 - accept in ranges A1 (3)
2,500,000 to 3,000,000 and 4,500,000 to
5,000,000

Question Answer Mark

Number
1 (b)(ii) Correct region shaded - where x <5,000, down to
y=0 A1 (1)

Question Answer Mark

Number
1 (b)(iii) Correct value is RM12,500,000
Accept answers only from the chart in (b)(i)
between RM12,000,000 and RM13,000,000 A1 (1)

Question Answer Mark

Number
1 (c) Overhead expenses = 0.25 x RM900 = RM225 M1
Labour = 0.45 x RM900 = RM405 M1
Materials = RM900 - RM225 - RM405 = RM270 A1(3)

(Total for Question 1 = 12 marks)

Question Answer Mark
Number
2 (a) Total of the discount rates
= 0.897 + 0.804 + 0.721 + 0.647 = 3.069 M1
Annual additional cash flow
= 700 x S$300 = S$210,000 M1
Net present value of additional cash flow
= 3.069 x S$210,000 = S$644,490 M1
Net present value of investment
= S$644,490 - S$630,000 = S$14,490 A1(4)

Question Answer Mark

Number
2 (b)(i) Discount factor for year 1 is 1 / 1.145 M1
= 0.87336 A1(2)
Accept 0.873 or more accurate answer

Question Answer Mark

Number
2 (b)(ii) Internal rate of return
= 11.5% + (3% x 14,490 / (14,490 - (24,339)))
= 11.5% + (43470 / 38829)% M1
= 12.619524067% = 12.6% or more accurate
Follow through marks available for answers A1ft(2)
between 10% and 15%

Alternatively,
(14,490 x 14.5%) - ((24,339) x 11.5%)
--------------------------------------------------(M1)
14,490 - (24,339)
= 12.619524067% = 12.6% or more
accurate(A1ft)

Question Answer Mark

Number
2 (c) Contribution to NPV in Year 5 needs to be
S$100,000 - S$14,490) = S$85,510 M1
Additional cash flow in year 5 to generate this
contribution
= 85,510 / 0.580 = S$147,431 M1
At S$300 per unit,
147,431 / 300 = 491.4 = 492 units would be M1A1
required. (4)

(Total for Question 2 = 12 marks)

Question Answer Mark
Number
3 (a) RM550,000 / RM5,250,000 = 0.1047619048
4√0.1047619048 = 0.5689195352 M1
Rate of depreciation = 1 - 0.5689195352 M1
= 43.108046% or A1
= 43.11% A1r(4)

Question Answer Mark

Number
3 (b) RM5,250,000 x (1 - 0.4311)2
= RM1,699,147.85 = RM1,699,148
In order to gain marks for method, candidate M1M1
must use figure from (a) which has 4 significant A1(3)
figures

Alternatively
Depreciation in year 1 is RM5,250,000 x 0.4311
= RM2,263,275
Book Value at end of year 1 is RM2,986,725 (M1)
Depreciation in year 2 is RM2,986,725 x 0.4311
= RM1,287,577 (M1)
Book value at end of year 2
= RM2,986,725 - RM1,287,577 = RM1,699,148
(A1)

Question Answer Mark

Number
3 (c)(i) Annual depreciation
= (RM550,000 - RM24,000) / 4 M1
= RM131,500 A1(2)

Question Answer Mark

Number
3 (c)(ii) Percentage written of each year
= RM131,500 / RM550,000 M1
= 23.909090.....% A1ft
Accept answers rounding to 23.9% (2)

Question Answer Mark

Number
3 (c)(iii) Book value after 3 years
= RM550,000 - (3 x 131,500) M1
= RM155,500 A1 (2)

(Total for Question 3 = 13 marks)

Question Answer Mark
Number
4 (a)(i) Total assets
= 5,040 + 24,000 + 43,750 + 25,400 + 12,600 M1
= RM110,790 A1(2)

Question Answer Mark

Number
4 (a)(ii) Total liabilities
= 34,150 + 327,350 + 29,730 M1
= RM391,230 A1(2)

Question Answer Mark

Number
4 (b)(i) Available to unsecured creditors
= RM110,790 - RM22,230 = RM88,560 M1
Payable to unsecured creditors
= RM391,230 - RM22,230 = RM369,000 M1
Rate in the ringgit = 88560 / 369,000 = 0.24 M1
Rate is RM0.24 in the ringgit A1(4)

Question Answer Mark

Number
4 (b)(ii) Amount owed
= RM4,740 / 0.24 M1
= RM19,750 A1 (2)

Question Answer Mark

Number
4 (b)(iii) Amount paid on unsecured debt
= ⅔ x RM25,650 x 0.24 = RM4,104 M1
Secured debt = ⅓ x RM25,650 = RM8,550 M1
Amount paid in total is RM4,104 + RM8,550
= RM12,654 A1 (3)

(Total for Question 4 = 13 marks)

Question Answer Mark
Number
5
Block A Block B
Rate of interest 3.30% 5.00%
(on nominal
value of stock)
AU$100 of AU$77 AU$84¾
stock bought at
Amount AU$62,370 AU$72,885
invested
Nominal value AU$81,000 AU$86,000
of stock
purchase
Stock held for 3.5 years 4 years
Amount of total AU$9,355.50 AU$17,200
interest earned
Total 15.00% 23.60%
percentage
yield on
amount
invested

Award M1 for reproduction of the table, where at least

one answer has been attempted
M1
Block A
AU$100 stock bought for 100 x 62,370 / 81,000 =
AU$77 M1A1
Total interest earned is 62,370 x 0.15 = AU$9355.50 M1A1
Rate of interest is 9355.50 / (81,000 x 3.5) = 3.30% M1A1
(must have 2dp for consistency with table data)
Block B
Nominal value is 72,885 / 0.8475 = AU$86,000 M1A1
Total interest 4 x 5% x 86,000 = AU$17,200 M1A1
Total yield 17,200 / 72,885 = 23.5988% M1A1
Accept 23.60% (must have 2dp) (13)

(Total for Question 5 = 13 marks)

Question Answer Mark
Number
6 (a)(i) Value after 4 years
= RM265,000 x 1.074 M1
= RM347,360.94 A1(2)
Accept RM347,361

Question Answer Mark

Number
6 (a)(ii) Value after 3.5 years
= RM265,000 x 1.073.5 = RM335,806.50 M1
Accept RM335,806 or RM335,807 A1(2)

Question Answer Mark

Number
6 (b)(i) Value in 2013: RM306,000 / 1.074 M1
= RM233,445.93
= RM233,000 A1r (2)

Question Answer Mark

Number
6 (b)(ii) Value after 1 year: RM233,445.93 x 1.07
M1
= RM249,787.15
= RM250,000
A1r (2)
Candidate should use RM233,445.93 and NOT
RM233,000, as this achieves RM249,310 which
rounds to RM249,000, not RM250,000 (M0A0)

Alternatively
Value after one year: RM 306,000 / 1.073
= RM249,787.15
= RM250,000

Question Answer Mark

Number
6 (c) Proportional increase
= RM334,375 / RM306,000 = 1.092729 M1
Proportional increase per annum
= 3√(334,375 / 306,000) = 1.0300006 = 1.03 M1
Percentage increase per annum = 3% A1 (3)

(Total for Question 6 = 11 marks)

Question Answer Mark
Number
7 (a) Net sales: K2,320M - K44M = K2276M M1
Average collection period
= 365 x K156M / K2,276M = 25.0176 days M1
= 25 days A1(3)

Question Answer Mark

Number
7 (b) Overhead expense = 17% x K2,276M (not
K2,320M) M1
= K386.92M A1(2)

Question Answer Mark

Number
7 (c)(i) Net purchases = K95M x 365 / 25 M1
= K1,387M A1(2)

Question Answer Mark

Number
7 (c)(ii) Purchase returns = K1,400M - K1,387M M1
= K13M A1ft (2)

Question Answer Mark

Number
7 (d) Current ratio = 304.8 / 127 M1
= 2.4 : 1 A1 (2)

Question Answer Mark

Number
7 (e) The current ratio exceeds 2 : 1, so the company's
finances are healthy. A1ft (1)

Question Answer Mark

Number
7 (f) Current assets minus stock = 1.7 x K127M
= K215.9M M1
Stock held = K304.8M - K215.9M
= K88.9M A1 (2)

(Total for Question 7 = 14 marks)

Question Answer Mark
Number
8 (a) Index of sales for 2016= 100 x 108,000 / 90,000 M1
= 120 A1
Index of sales for 2017 = 100 x 102,600 / 90,000
= 114 A1(3)

Question Answer Mark

Number
8 (b) Index of prices for 2016 = 100 x 18.5 /20 = 92.5 A1
Index of prices for 2017 (chain)
= 100 x 20.72 / 18.5 M1
= 112 A1(3)

Question Answer Mark

Number
8 (c) Sales in 2018 = 1.09 x 102,600 M1
= 111,834 A1 (2)

Question Answer Mark

Number
8 (d) Sales value for 2015 = 90,000 x £20 = £1,800,000 M1

Year 2015 2016 2017

Sales (units) 90,000 108,000 102,600
Price £20 £18.50 £20.72
Value £1,800,000 £1,998,000 £2,125,872
Index 100 111 118.104 A1A1

For 2017, answers of 118 or 118.1 only.

Correct method for either 2016 or 2017 earns M1 M1 (4)

(Total for Question 8 = 12 marks)

Appendix- Question 1(b)(i)