Mark Scheme

January 2021
Final

Pearson LCCI Certificate in Advanced

Business Calculations Level 3
(ASE3003)
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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) Allthat Glitters Ltd:

AU$ Discount NPV (AU$)

Factor
Cost 8,000,000 -1.000 -8,000,000 M1
Year 1 800,000 0.917 733,600
Year 2 2,700,000 0.842 2,273,400 A1 any
Year 3 4,500,000 0.772 3,474,000
Year 4 5,000,000 0.708 3,540,000
-------------- M1
2,021,000 A1
First M1 is for setting about the NPV calculation
correctly, including the investment cost at par and
shown as negative. A1 for any one of the yearly
contributions to NPV. Second M1 is for adding the
figures. Final A1 is for achieving the correct answer.
(4)

Question Answer Mark

Number
1 (b) Chief Engineer's proposal:

AU$ Discount NPV (AU$)

Factor
Cost 9,600,000 -1.000 -9,600,000
Year 1 800,000 0.917 733,600
Year 2 2,700,000 0.842 2,273,400
Year 3 5,400,000 0.772 4,168,800
A1
Year 4 6,000,000 0.708 4,248,000
-------------
1,823,800 A1

A1 for fully correct row for both of Year 3 and Year 4,

and A1 for new NPV.

As a percentage,
1,823,800
=( ) 100 = 90.24245423% A1
2,021,000
Accept 90% or more accurate (3)
Question Answer Mark
Number
1 (c) The NPV after 4 years is lower than for the original, A1ft
less expensive, proposal
Therefore, I would not agree. A1ft

or

Although the NPV after 4 years is slightly lower than

for the original proposal, if the project continues after
this, it may have a higher output, and thus has
potential to generate higher profits for the
company.(A1)
Therefore, I would agree. (A1)

Reward any other explanation that accords with the

data. One mark for a valid reason. Two marks for a
valid reason with an accompanying
agreement/disagreement.
No marks for "agree" or "disagree" without a valid
justification. (2)

Question Answer Mark

Number
1 (d) IRR

2,604,300
= 7% + (9% − 7%) M1M1
(2,604,300 − 2,021,000)

= 7% + 8.92954% A1
= 15.92954%
Accept 16% or more accurate

M1 for numerator in formula, and M1 for

denominator.

Alternatively, IRR

2,604,300  9% − 2,021,000  7% 9, 291,700

= = (M1M1)
2,604,300 − 2,012,000 583,300

= 15.92954% as before.(A1) (3)

(Total for Question 1 = 12 marks)

Question Answer Mark
Number
2 (a) Year Annual Cumulative Book Value at
Depreciation Depreciation end of Year
K K K
0 27,500,000
1 3,300,000 3,300,000 24,200,000
2 2,904,000 6,204,000 21,296,000
3 2,555,520 8,759,520 18,740,480

M1 for 12% of K27,500,000 as K3,300,000 M1

M1 for cumulative column M1
M1 for book value column M1
A1 for fully correct table A1(4)

Question Answer Mark

Number
2 (b)(i) Depreciation in Year 5:
K18,740,480 x 0.88 x 0.12 M1
= K1,978,994.688 A1
Accept K1,978,995 or more accurate (2)

Question Answer Mark

Number
2 (b)(ii) Book value at end year 6:
K27,500,000 x (0.88)6
= K12,771,112.39 M1
Accept K12,771,112 or more accurate A1

Alternatively
K18,740,480 x (0.88)3 (M1)
= K12,771,112.39 (A1)
Accept K12,771,112 or more accurate (2)

Question Answer Mark

Number
2 (b)(iii) Depreciation in year 8:
K27,500,000 x (0.88)7 x 0.12 M1
= K1,348,629.468 A1
Accept K1,348,629

Alternatively, using their answer to (b)(ii),

K12,771,112 x 0.88 x 0.12 (M1)
= K1,348,629.427 (A1)
Accept K1,348,629 (2)
Question Answer Mark
Number
2 (c) Original cost is (annual depreciation x years)
+ scrap value
Cost = (4 x K62,375) + K90,000 M1
= K339,500 A1 (2)

(Total for Question 2 = 12 marks)

Question Answer Mark
Number
3 (a)(i) Liabilities = 145,250€ + 124,750€ M14
= 270,000€
Assets as a percentage
= 159,610€ / 270,000€ M1
= 0.5911481481 = 59.1% to 3sf A1r(3)

Question Answer Mark

Number
3 (a)(ii) Paid to unsecured creditors
= 159,610€ - 124,750€ M1
= 34,860€ A1(2)

Question Answer Mark

Number
3 (a)(iii) Dividend calculation: 34,860€ / 145,250€ M1
= 0.24
Dividend rate payable is 24c in the euro A1
Also accept 0.24€ in the euro (2)

Question Answer Mark

Number
3 (b) Nicole received proportionately more than
Pierre. A1
Therefore, Nicole is the secured creditor. A1(2)
The second mark is only available to
candidates scoring the first mark.

Question Answer Mark

Number
3 (c)(i) Pierre is the unsecured creditor.
His rate is 7,200€ / 18,000€ = 0.40 M1
= 0.40€ (or 40c) in the € A1(2)

Question Answer Mark

Number
3 (c)(ii) Nicole is both a secured creditor and an
unsecured creditor.
Let the amount owed to Nicole as a secured
creditor be S. M1
Then, S + 0.4(25,000 - S) = 12,700 M1
Thus 0.6S = 12,700 – 10,000 = 2,700
Amount of secured debt = 2,700 / 0.6 M1
= 4,500€ A1(4)

(Total for Question 3 = 15 marks)

Question Answer Mark
Number
4 (a) Total costs of Hot Wire Method
= RM3,280,000 + (6,000 x RM1,100) M1
= RM9,880,000
Total variable costs of Cold Conductor Method
= 6,000 x 550 = RM3,300,000 M1
Fixed costs for Cold Conductor Method
= RM9,880,000 – RM3,300,000 M1
= RM6,580,000 A1(4)

Question Answer Mark

Number
4 (b)(i)

Marks for correct axes and labelling A1

Position of intersection A1
Intercept for each line on the y axis A1A1(4)
Question Answer Mark
Number
4 (b)(ii)

Correct region shaded to left of x=6,000 A1 (1)

Question Answer Mark
Number
4 (b)(iii)

Correct calculated value is RM9,055,000 A1 (1)

Therefore, accept answers from the chart in (b)(i)
between RM8,800,000 and RM9,200,000

Question Answer Mark

Number
4 (c) Overhead expenses = 0.25 x RM1,100 = RM275 M1
Labour = 0.3 x RM1,100 = RM330 M1
Materials = RM1,100 - RM275 - RM330 = RM495 A1

Alternatively,
Overhead expenses are 25% of the total overhead
expenses M1
Labour is 30%
Therefore Materials are 45% M1
45% x RM1,100 = RM495 A1 (3)

(Total for Question 4 = 13 marks)

Question Answer Mark
Number
5 (a)(i) 2x + 3y = 120 (Eq 1) M1
x + 2y = 70 (Eq 2) M1

Multiply Eq 2 by 2: 2x + 4y = 140 M1
Subtract Eq 1: y = 20 M1
Thus, it takes 20 minutes to bake one batch of A1
bagels.

Alternatively, the equations can be used

to solve first for x, by multiplication of
Eq. 1 by 2 and Eq. 2 by 3, for example.
Accept any other algebraic symbols in
place of x and y. (5)

Question Answer Mark

Number
5 (a)(ii) Substitute in Eq 2: x + (2 x 20) = 70 M1
Thus, x = 30 A1
It takes 30 minutes to bake one batch of
brioches

Alternatively, if x was found in (i), then

substitution into Eq 1 will derive a value for y
in this part.

Where candidates have not manipulated

the equations correctly in (a)(i), but
carry out correct manipulation in this
part in order to solve one of the unknown
variables, method marks normally
attributable to (a)(i) may be awarded in
this part. (2)

Question Answer Mark

Number
5 (b) If Qdemand = Qsupply, then
480 - 200P = -150 + 150P M1
Hence 350P = 480 + 150 = 630 M1
Thus Price = S$1.80 A1 (3)
Question Answer Mark
Number
5 (c) Substituting back in the supply equation.
Qsupply = -150 + (150 x 1.80) M1
= 120 batches of brioches A1ft

Alternatively, substituting in the demand

equation.
Qdemand = 480 – (200 x 1.80) = 120
= 120 batches of brioches (2)

(Total for Question 5 = 12 marks)

Question Answer Mark
Number
6 (a) Percentage return on capital employed:
RM111,840 / RM745,600 = 0.15 = 15% M1A1(2)

Question Answer Mark

Number
6 (b) Gross profit: RM111,840 + RM84,070 M1
= RM195,910
RM195,910 / RM753,500 = 0.26 = 26% M1A1
(3)

Question Answer Mark

Number
6 (c) Average stock: (RM54,230 + RM64,770)/ 2 M1
= RM59,500
COGS = Net sales - Gross profit
= RM753,500 - RM195,910 = RM557,590 M1
Rate of stock turn: RM557,590 / RM59,500 M1
= 9.37126 times per annum A1 (4)
Accept 9.4 times or more accurate

Question Answer Mark

Number
6 (d) Average days in stock:
365 x RM59,500 / RM557,590 M1
= 38.94886924 days A1
Accept 39 days or more accurate (2)

(Total for Question 6 = 11 marks)

Question Answer Mark
Number
7 (a)(i) Value of the house at start
£560,000 M1A1
= = £469,594.35
(1 + 0.045)4
= £469,600 to nearest hundred A1r(3)

Question Answer Mark

Number
7 (a)(ii) Value of house after one year
= £469,594.35 x 1.045 M1
= £490,726.10
= £490,700 to nearest hundred A1r

Also accept use of £469,600 as initial price.

Thus, £469,600 x 1.045 = £490,732 (M1)
= £490,700 to nearest hundred (A1r)

Alternatively, value in 2015

£560,000
= = £490,726.10 (M1)
(1 + 0.045)3
= £490,700 to nearest hundred (A1r) (2)

Question Answer Mark

Number
7 (b) Proportional increase = A/P
= £620,882 / £560,000 M1
= 1.108717857
Proportional increase per annum
= 3√1.108717857 = 1.035 M1
Percentage increase per annum = 3.5% A1(3)

Question Answer Mark

Number
7 (c)(i) Proportion earned
£1,000,000
= = 1.038000147  1.038 M1
£963,391
Percentage earned per annum
= 2  (1.038 − 1) 100 = 7.6% M1A1

Alternatively,
1,000,000 − 963,391 = 36,609 M1
Percentage earned per annum
£36,602  2
= = 7.6% M1A1
£963,391 (3)
Question Answer Mark
Number
7 (c)(ii) Value of the bill
= £963,391 (1 +
0.076
) = £975,593.95 M1 A1
6
Accept £975,594 as fully accurate (2)

(Total for Question 7 = 13 marks)

Question Answer Mark
Number
8 (a) Index of sales for 2018= 100 x 95,000 / 50,000 M1
= 190 A1
Index of sales for 2019 = 100 x 132,000 / 50,000
= 264 A1(3)

Question Answer Mark

Number
8 (b) Chain index of prices for 2017 = 100 A1
Index for 2018 = 100 x 295 / 320 = 92.1875 A1
Index of prices for 2019
= 100 x 289 / 295 = 97.966 A1(3)
Accept whole numbers or more accurate values.

Question Answer Mark

Number
8 (c) Sales (units) in 2020 = 1.07 x 132,000 M1
= 141,240 A1 (2)

Question Answer Mark

Number
8 (d) Sales value for 2017 = 50,000 x RM320 = RM16,000,000 M1

Year 2017 2018 2019

Sales (units) 50,000 95,000 132,000
Price RM320 RM295 RM289
Value RM16,000,000 RM28,025,000 RM38,148,000
Index 100 175.156 238.425 A1A1

A1 for whole number or more accurate values for each of 2018

and 2019.
Correct method for either the index for 2018 or for the index for
2019 earns the second M1 M1 (4)

(Total for Question 8 = 12 marks)