Pearson LCCI

Certificate in Advanced
Business Calculations
Level 3
Tuesday 10 April 2018 Paper Reference

Time: 3 hours ASE3003

You must have:
An answer book

Instructions
• Do not open this paper until you are told to do so by the supervisor.
• – pencil
U
 se black/blue ink or ball-point pen.
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.
• All answersbothmustsidesbeofcorrectly
Write on the page.
• If you need more space, use thenumbered but need not be in numerical order.
• candidate number and questionadditional sheets provided. Write your name,
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.
• The marks
There are eight questions in this question paper.
• – use this asfora guide
each question are shown in brackets
as to how much time to spend on each question.
• You may use mathematical and statistical tables.
• wordmay
You use a calculator provided the calculator gives no printout, has no
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

*P57237A*
P57237A
©2018 Pearson Education Ltd.

1/1/1/1/1/1/1/1/1/1/1
 Answer ALL questions.
1 A machine for making shoelaces costs K95,000,000 (Myanmar Kyat). It is depreciated
at a rate of 32% per annum, using the diminishing balance method.
(a) Prepare a depreciation schedule for the first three years, to show annual
depreciation, cumulative depreciation and the book value at the end of each year.
(4)
(b) Calculate the:
(i) amount of depreciation that occurs in the fourth year
(2)
(ii) book value at the end of five years
(2)
(iii) number of completed years it will take for the machine’s book value to fall
below K5,000,000, using the compound interest formula.
(5)

(Total for Question 1 = 13 marks)

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2 Arthur Slugworth makes and sells wholesale batches of chocolate products for $574
(US Dollars) per batch. Production costs are as follows:
Fixed costs per period $451,500
Variable costs per wholesale batch $434
(a) Calculate the break-even point in wholesale batches produced and sold.
(3)
Willy Wonka sells a similar product. By investing in newer machinery, his fixed costs
are higher at $485,000 per period but labour costs are lower, which means his
variable costs of $394 per wholesale batch are lower. This product is sold by Willy
Wonka for $560 per wholesale batch.
(b) Calculate the profit or loss per period for Arthur Slugworth and for Willy Wonka
for an output of 3,000 wholesale batches in each case.
(4)
Willy Wonka then changes the selling price of his product for the following trading
period. The fixed costs increase by $10,000 while variable costs remain unchanged.
The break-even point for production and sales in this trading period is 2,500
wholesale batches.
(c) For this trading period, calculate the:
(i) contribution per wholesale batch
(2)
(ii) selling price per wholesale batch.
(2)

(Total for Question 2 = 11 marks)

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3 Mary Ann buys bread from a local bakery to make sandwiches to sell in her shop.
One day, she bought 10 loaves of white bread and 8 loaves of wholegrain bread, for a
total of S$129 (Singapore Dollars). The next day, she bought 20 loaves of white bread
and 9 loaves of wholegrain bread, for a total of S$202
Using simultaneous equations, this information can be expressed as
10x + 8y = 129
20x + 9y = 202
where x is the cost of a loaf of white bread, and y is the cost of a loaf of wholegrain
bread.
(a) By solving these equations, or otherwise, calculate the cost of a loaf of:
(i)
wholegrain bread
(4)
(ii)
white bread.
(3)
The CookAtHome Company manufactures food mixers. The owner calculates that
the number of food mixers demanded by customers increases when the company
reduces its price. He thinks the equation describing this demand is given by
Qdemand = 1,000 – 3P
where Qdemand is the quantity demanded by customers and P is the price of a
food mixer in Singapore Dollars.
At the same time, the owner of the CookAtHome Company considers its costs and
therefore controls the quantity of food mixers it supplies at any particular price.
The equation describing this supply is given by
Qsupply = –100 + 2.5P
where Qsupply is the quantity supplied by the company and P is the price of a
food mixer in Singapore Dollars.
(b) Find the price at which both Qdemand and Qsupply are equal.
(3)
(c) Find the quantity of food mixers supplied by the company at that price.
(2)

(Total for Question 3 = 12 marks)

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4 An index of industrial production at January 2017 is shown below.

Industry Weight Index (Jan 2010 = 100)

Mining and quarrying 78 140

Construction 90 94

Gas, electricity and water 102 123

Manufacturing:

Food and drink 69 136

Chemicals 117 149

Metals 62 96

Engineering 140 153

Textiles 116 87

Other manufacturing 226 209

(a) Use the index for Mining and quarrying from the table to describe the change
since 2010.
(3)
(b) Giving your answers to the nearest whole number, calculate the index of
industrial production, with January 2010 = 100, for:
(i)
all industries
(5)
(ii) the group of six manufacturing industries.
(3)
The index of industrial production for all industries for January 2010 was 115 with
January 2000 = 100
(c) Calculate the index of industrial production for all industries for
January 2017 with January 2000 = 100
(2)

(Total for Question 4 = 13 marks)

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5 Hugh Jeffort, a famous investor, estimates that the cost of Project X will be
RM3,000,000 (Malaysian Ringgit) and that it will earn a return of RM900,000 per
annum.
(a) Calculate the expected payback period of Project X in years and months.
(3)
(b) Calculate the net present value of Project X if it has a lifetime of five years, using a
discount rate of 12% and the following table.

Year 12% Discount factor

0 1.000

1 0.893

2 0.797

3 0.712

4 0.636

5 0.567
(4)
Another investor, Maxi Million, estimates the following figures for investment
Project Y.
Initial cost of the project RM5,200,000
Expected life of the project 6 years
Total return before allowing for repairs and maintenance RM8,880,000
Average cost of repairs and maintenance per annum RM180,000
(c) Calculate the average rate of return per annum of Project Y.
(4)
A third investor, Penny Less, calculates the net present value for investment
Project Z to be positive RM520,000 at a discount rate of 11%, and negative
RM190,000 at a discount rate of 13%.
(d) Calculate the internal rate of return of Project Z.
(3)

(Total for Question 5 = 14 marks)

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6 Najwa is owed money in three bankruptcies.
Johor Jumpers became bankrupt recently. Najwa is an unsecured creditor. She is
owed RM129,000 and receives RM20,640
(a) Calculate the rate in the Ringgit paid to unsecured creditors of Johor Jumpers.
(2)
Johor Jumpers has secured creditors owed RM75,200 and unsecured creditors owed
RM386,000. The expenses of winding up the business are RM12,200
(b) Calculate the value of the assets of Johor Jumpers at the start of the process of
winding up.
(3)
Malacca Moccasins manufactured footwear, but became bankrupt recently. Najwa
is owed money as a secured creditor and also as an unsecured creditor. She is
owed RM95,000 in total, and receives RM57,600 in total. The rate paid to unsecured
creditors is RM0.32 in the Ringgit.
(c) Calculate the amount owed to:
(i) an unsecured creditor who is paid RM576
(2)
(ii) Najwa as a secured creditor of Malacca Moccasins.
(4)
Kuching Kitchens owes Najwa RM37,750 as a secured creditor and RM208,000 as an
unsecured creditor when the company becomes bankrupt. The rate in the Ringgit
paid to unsecured creditors is RM0.075
(d) Calculate the total amount Najwa receives following the bankruptcy of Kuching
Kitchens.
(2)

(Total for Question 6 = 13 marks)

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7 Rayyan deposited RM25,000 in a bank account for three years at 4.75% simple
interest per annum, calculated at the end of the period.
(a) (i) Calculate the total amount of interest earned.
(2)
(ii) However, if Rayyan’s deposit earned 4.75% compound interest per annum
instead, and interest was added at the end of each year, how much interest
would he earn in three years?
(3)
Puteri works out her bank interest using the products method, and makes
calculations based on simple interest.
At the close of business on Monday, her balance is RM18,204
Based on a 365-day year, Puteri calculates that this will earn 570sen interest by the
close of business on Friday, four days later.
(b) Calculate the:
(i) annual rate of interest, using Puteri’s figures, correct to four significant figures
(3)
(ii) annual rate of interest, using Puteri’s figures, correct to one decimal place
(1)
(iii) error introduced by the rounding in (b)(ii), expressed as a percentage of your
answer to (b)(i).
(2)

(Total for Question 7 = 11 marks)

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8 Adelia purchased units in a unit trust with an offer price of $170 per unit, and sold the
units after 4½ years at $221 per unit.
(a) Express the increase in price of the units as a percentage increase per annum,
based on simple interest.
(2)
Adelia also bought 25,000 units in a unit trust and sold them later at $13.85 each. The
total amount she received was $33,750 more than she paid.
(b) Calculate the original amount paid per unit by Adelia.
(3)
Ahmad purchased 140,000 3½% preference shares (nominal value $7) at $9.03
Calculate the:
(c) (i) total cost of the shares
(2)
(ii) dividend received each year.
(2)
$100 of 4¼% Government Stock can be bought for $84. Interest is paid half yearly.
A bank invested $777,000 in the stock and held it for three years.
Calculate the:
(d) (i) nominal value of the stock bought by the bank
(2)
(ii) total interest received over this period.
(2)

(Total for Question 8 = 13 marks)

TOTAL FOR PAPER = 100 MARKS

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