End Nov2011 Wa

Topics: Depreciation, Investment, Net present value Pages: 10 (1966 words) Published: May 24, 2013
Answer all questions

Question 1

An industrial product may be manufactured by two methods of production.

Using Method X, fixed costs are RM6,540,000 per period and variable costs are RM57 per unit. Using Method Y, fixed costs are RM7,800,000 per period and variable costs are RM45 per unit.

a) Calculate the level of output per period for which the total costs are the same. (3 marks)

b) Calculate the total cost per period for Method X at this output. (2 marks)

c) State which method should be chosen for sales and production of 100,000 units per period. (1 mark)
(d) Explain how your answer to (a) supports your answer to (c). (1 mark)
Method X is chosen for production, and a selling price is set for break-even of 75,000 units per period.

e) Calculate:
i) the selling price (3 marks)

ii) the profit for production and sales of 100,000 units per period. (2 marks) (Total 12 marks)

Question 2
a)An investment account of RM175,000 attracts 3.65% compound interest per annum, compounded six-monthly.

i) How much will be in the account after 5 years?(3 marks)

(ii) How much of this is interest?(1 mark)

A bank successfully tenders RM97,400 for a RM100,000 Treasury bill that has 6 months to run and is to be redeemed at par.

b) Calculate the rate of simple interest per annum paid on the Treasury bill.(5 marks) (Total 9 marks)

Question 3

Company A sells Product P with the following prices:
Year 2003 2004 2005 2006

Price(RM) 40.96 46.08 57.60 50.40

a) Calculate the prices of Product P for years 2004 to 2006 as a chain base index.(4 marks)

b) Giving your answers correct to four significant figures, calculate the index of prices for Product P for the years 2003 to 2006 with year 2003 as the base year.(5 marks)

The price relative for Product P for year 2003 with 2002 as the base year is 1.28.

c) Calculate the selling price of Product P in year 2002.(2 marks)

In 2006, company A sells a second product, Product Q, at a price of RM62.10.

d) Using a weighting of 100 for Product P and 150 for Product Q, calculate the weighted average for prices for Product P and Product Q combined in 2006.(5 marks) (Total 16 marks)

Question 4

At the end of the year 2007 the current ratio for Company P was 3.2 : 1. Its current liabilities were RM4,750,000.

a) Calculate the current assets for Company P at that time.(2 marks)

At the end of the same year, 2007, Company P had an acid test ratio of 3.0 : 1.

b) Calculate the stock held by Company P at that time.(3 marks)

c) State whether you think the liquidity of Company P was healthy or not. Explain your answer. (3 marks)

In the previous year, 2006, the rate of stockturn for Company P was 12. At the start of that year the company held stock to the value of RM180,000, and at the end of that year the value of stock held was RM150,000.

d) Calculate the net purchases of Company P for that year.(4 marks)

The actual purchases for Company P during 2006 were RM2,175,000.

e) Calculate the difference between this and your answer to (d), and say what this difference represents.(3 marks)
(Total 15 marks)
Question 5
The following information relates to the business of a bankrupt trader. RM
Cash in hand 105
Creditors ?
Machinery 11,500
Bank overdraft 25,300
Trade debtors 6,090
Stock 16,420
Office equipment ?
Vehicles 17,000
Total assets 59,140
Total liabilities 97,500

a) Calculate the value of her office equipment and the amount owed to creditors.(4 marks) The assets were realised in full at their book values, listed above. ‘Creditors’ include RM3,700, which, together with the bank overdraft, are secured. Hence, RM29,000 of the liabilities, made up of the bank overdraft and other secured creditors, must be paid first and in full.


b) the...
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