ASE2003/4/12 Page 1 of 6 Education Development International plc 2012

Business Calculations

ASE2003

Level 2

Wednesday 7 November 2012

Time allowed: 2 hours 30 minutes



Information

There are 8 questions in this examination.
Total marks available: 100


Instructions

Do not open this paper until you are told to do so by the supervisor.
Answer all questions.
Write your answers in blue or black ink/ballpoint. You can only use pencil for graphs, charts,
diagrams, etc.
Please ensure your answers are written clearly.
Begin your answer to each question on a new page.
All answers must be correctly numbered but need not be in numerical order.
Workings must be shown.
You can 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.



ASE2003/4/12 Page 2 of 6 Education Development International plc 2012
Answer all questions

QUESTION 1

Ivan invested 12,000 for 15 years at compound interest of 2.5% per annum.

Calculate the amount in the account (principal plus interest):

(a) after 1 year
(3 marks)
(b) after 2 years
(3 marks)
(c) after 15 years (you are advised to use the formula).
(5 marks)

(Total 11 marks)




QUESTION 2

A retail companys total sales in a year were 2,710,000. The cost price of goods sold was 2,040,000.

During the year the following overheads were paid (treat wages as overheads):


Wages 198,500
Electricity and gas 15,300
Telephone 1,790
Rent of premises 41,090
Office expenses 17,030

Calculate:

(a) gross profit
(2 marks)
(b) net profit
(3 marks)
(c) the total overheads as a percentage of the total sales.
(2 marks)

The electricity and gas charges include a discount of 10% of the total for buying both from the same
Supplier. The charge for electricity is 5,700 before discount.

(d) Calculate the amount charged for gas before discount.
(3 marks)

At the end of the year the company expanded by issuing new shares in the business.
It planned to raise 2,450,000 through the issue of 70,000 shares.

(e) Calculate the price per share.
(2 marks)
Anne-Marie has 10,000 to spend on the companys shares, at an exchange rate of 1 = 1.3.

(f) Calculate the maximum number of shares that Anne-Marie could buy.
(3 marks)

(Total 15 marks)




ASE2003/4/12 Page 3 of 6 Education Development International plc 2012
QUESTION 3

Madeline, a sales representative, is paid a basic salary of 315 per week.

(a) Calculate Madelines annual basic salary, based on a 365-day year.
(2 marks)

In addition, commission is paid on 4-weekly sales, according to the following table:

Sales () Range () Rate of commission

First 100,000 0 - 100,000 0.05%
Next 250,000 100,001 - 350,000 0.1%
Over 350,000 350,001 upward 0.5%

In a particular 4-week period, Period A, Madeline sells 160,000 worth of goods.

She earns commission as follows:

0.05% on the first 100,000 of sales = 0.05% x 100,000

0.1% on the remaining sales of 60,000 = 0.1% x 60,000

(b) Calculate Madelines total earnings, before deductions, for Period A.
(3 marks)

In another 4-week period, Period B, Madeline sells 395,000 worth of goods.

(c) Calculate:

(i) Madelines average sales per day for Period B
(2 marks)
(ii) Madelines total commission for Period B.
(4 marks)

In a particular financial year, Madeline earns 27,000 before deductions. Of this, 7,500 is not subject to
income tax and the remainder is taxed at 21%.

(d) Calculate the income tax paid by Madeline.
(2 marks)

(Total 13 marks)



ASE2003/4/12 Page 4 of 6 Education Development International plc 2012
QUESTION 4

Manufacturer M sells Item A for 3,900 per 500 units.

(a) Calculate:

(i) the cost of an order for 40,000 units
(2 marks)
(ii) the price of one unit of Item A in dollars at an exchange rate of 1 = $1.40.
(2 marks)

Manufacturer M also makes Item B, at a rate of 1,750 units per day.

(b) Calculate how many whole days will be required to complete an order for 20,000 units of item B.
(3 marks)

The above orders for Items A and B are invoiced together, and the invoice total is 450,000.

(c) Calculate:

(i) the average cost per unit (Items A and B together)
(3 marks)
(ii) the cost per unit of Item B.
(3 marks)

After delivery of this order, 7 units of Item B were found to be faulty and were returned.

(d) Calculate units returned as a percentage of the quantity of Item B ordered.
(2 marks)

(Total 15 marks)


ASE2003/4/12 Page 5 of 6 Education Development International plc 2012
QUESTION 5

(a) An insurance company charges the following annual premiums for property insurance:

Buildings Contents
9.75 per 10,000 insured 2.05 per 1,000 insured.

Calculate:

(i) the cost of insuring a building valued at 180,000
(2 marks)
(ii) the cost of insuring contents valued at 13,400 if part-amounts (less than 1,000)
are charged in proportion
(2 marks)
(iii) the cost of insuring contents valued at 13,400 if the charge is per 1,000 or part
of.
(2 marks)
(b) The cost of insuring a building is 520 in a particular year.

The following year, the cost of insurance per 10,000 insured increases by 4%.
Also, the insured value of the building increases by 5%.

Calculate the new cost of insuring the building.
(2 marks)

(c) Insurance that costs 440 per annum if paid in a single payment, costs 38.50 per month if paid in
12 equal monthly instalments.

Calculate:

(i) the additional annual cost if paying by monthly instalments
(2 marks)
(ii) the additional annual cost as a percentage of the single payment cost.
(2 marks)

(Total 12 marks)

QUESTION 6

A computer may be bought for 1,490 cash or on hire purchase terms.
Bruce bought the computer on hire purchase terms.

The hire purchase terms require a deposit of 20% of the cash price. After payment of the deposit, the
remaining balance owing is increased by interest charges of 17%, and this new balance is paid in 24
equal monthly instalments.

(a) Calculate:

(i) the amount of the deposit
(2 marks)
(ii) the balance owing
(1 mark)
(iii) the total interest charges
(2 marks)
(iv) the total cost to Bruce
(2 marks)
(v) the amount of each monthly instalment.
(3 marks)

(b) Express the difference between the cash price and the total cost to Bruce, as a rate of simple
interest per annum on the amount borrowed.
(2 marks)

(Total 12 marks)

ASE2003/4/12 Page 6 of 6 Education Development International plc 2012
QUESTION 7

Sarah and James are partners in a business with capital initially invested in the ratio 4:3.

Sarah, the major partner, initially invested capital of 60,000.

(a) Calculate:

(i) Jamess initial investment
(2 marks)
(ii) their joint total initial investment.
(1 mark)

Now, with Jamess agreement, Sarah withdraws 5,000 of her capital.

(b) Calculate the new ratio of their investment, in its lowest terms.
(3 marks)

In the following year the partnership profit is 7,000. Sarah and James share this in proportion to their
new capital investments.

(c) Calculate:

(i) Sarahs share of these profits
(2 marks)
(ii) how much more would she have received if she had not withdrawn part of her
original investment
(3 marks)

(Total 11 marks)




QUESTION 8

Lana buys items A, B and C over the Internet. Items A and B cost as follows:

A 220 B $260

(a) Taking the exchange rates as 1 = 1.10 and $1 = 0.80, calculate:

(i) the cost of item A in dollars
(3 marks)
(ii) the cost of item B in euros.
(3 marks)

(b) Calculate the average cost of items A and B in pounds sterling.
(2 marks)
The average cost of items A, B and C is 210.

(c) Calculate the cost of item C in pounds sterling.
(3 marks)

(Total 11 marks)