LCCI L3 Advanced Business Calculations Nov 2016 - MS

Mark Scheme
Results
November 2016
PEARSON LCCI (ASE3003) Level 3

Advanced Business Calculations
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Publication code: 50583_ms
© Pearson Education Ltd 2016
ASE3003
November 2016
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.
ASE3003
November 2016
Question Answer Mark
Number
Award 1 mark (M1) for a fully correct method
1 (a)(i) Award 1 mark (A1) for 222851 or a more
accurate figure
Value in January 2020 = £198,000 x (1 + 0.03)4 M1
= £222,850.7(4) = £222,851 A1 (2)

Number
1 (a)(ii) Award 1 mark (M1) for a fully correct method
Award 1 mark (A1) for 24851 or a more
accurate figure
Increase in value = £222,851 - £198,000 M1
= £24,850.7(4) = £24,851 A1 (2)

Number
1 (b)(i) Award 1 mark (M1) for (1 – 0.03) or 0.97
Award 1 mark (M1) for a fully correct method
accurate figure
Value in January 2010 = £198,000 / (1 – 0.03)6 M1 M1
= 237,703.0(6) = £237,703 A1 (3)

Number
1 (b)(ii) Award 1 mark (M1) for a fully correct method
accurate figure
Fall in value in 2015 = £198,000 x 0.03 / 0.97 M1
= £6,123.71 A1 (2)
ASE3003
November 2016
Number
1 (c)(i) Award 1 mark (M1) for 0.00015 x 365
Award 1 mark (A1) for 5.5% or a more
accurate figure
Annual rate of interest = 0.00015 x 365 M1
= 0.05475
= 5.475% A1 (2)

Number
1 (c)(ii) Award 1 mark (M1) for
2900.35 x 0.00015 x 7
Award 1 mark (A1r) for 3.05
Interest = £2,900.35 x 0.00015 x 7 M1
= £3.0453675 = £3.05 A1r (2)
Total for Question 1 = 13 marks
ASE3003
November 2016
Number
2 (a)(i) Award 1 mark (M1) for 54400 divided by 85
Award 1 mark (A1) for 640
Number of units purchased = £54,400 / £85 M1
= 640 A1 (2)

Number
2 (a)(ii) Award 1 mark (M1) for correct calculation
involving any two of £13,056, £54,000 and 3
years. Award 2 marks (M1M1) for correct
calculation involving all three.
Award 1 mark (A1) for 8%
Yield per annum = £13,056 / (3 x £54,000) M1M1
= 0.08
= 8% A1 (3)

Number
2 (a)(iii) Award 1 mark (M1) for
13056 / their answer to 2(a)(i)
Award 1 mark (A1) for 20.4
Income per unit = £13,056 / 640 M1
= £20.40 A1 (2)

Number
2 (b)(i) Award 1 mark (M1) for a fully correct method
Total charges paid

= (0.2% + 0.3%) x £54,400 + £408 M1
= £680 A1 (2)
ASE3003
November 2016
Number
2 (b)(ii) Award 1 mark (M1) for their answer to
2(b)(i) / 54400
Award 1 mark (A1) for 1.25%
Charges percent = £680 / £54,400 M1
= 0.0125
= 1.25% A1 (2)

Number
2 (b)(iii) Award 1 mark (M1) for
13056 – their answer to 2(b)(i)
Income net of fees = £13,056 - £680 M1
= £12,376 A1 (2)
ASE3003
November 2016
Number
3 (a)(i) Award 1 mark (M1) for 37 - 31
Award 1 mark (M1) for 84750 / contribution
Award 1 mark (M1) for 96000 minus a
calculated units figure
Contribution = £37 - £31 M1
= £6
Units above break-even = £84,750 / £6 M1
= 14,125
Break-even = 96,000 – 14,125 M1
= 81,875 A1 (4)

Number
3 (a)(ii) Award 1 mark (M1) for their answer to
3(a)(i) 81875 x their contribution
Fixed cost per period = 81,875 x £6 M1
= £491,250 A1 (2)

Number
3 (b)(i) Award 1 mark (M1) for
£24.80 + £10.40 + £2.60
Correct value of £37.80 is used in 3(b)(iii)
Variable cost per unit

= £24.80 + £10.40 + £2.60 M1
= £37.80 (1)
ASE3003
November 2016
Number
3 (b)(ii) Award 1 mark (M1) for total variable cost
Award 1 mark (A1) for total cost
Total variable cost

= 5000 x £37.80 M1
= £189,000
Total cost
= £189,000 + £81,000
= £270,000 A1 (2)

Number
3 (b)(iii) Award 1 mark (M1) for setting up method.
Award 1 mark (M1) for expression in M.
Award 1 mark (A1) for 2433 units, rounded
Let maximum number of units be M. M1
Then, £81,000 + £37.80 x M < £173,000 M1
£37.80 x M < £92,000
M < 2433.86
M = 2,433 units A1r (3)
ASE3003
November 2016
Number
4 (a)(i) Award 1 mark (M1) for 2.5 x 2350000
Current assets = 2.5 x £2,350,000 M1
= £5,875,000 A1 (2)

Number
4 (a)(ii) Award 1 mark (M1) for
(2.5 – 0.8 Or 1.7) x 2350000
Stock = (2.5 – 0.8) x £2,350,000 M1
= £3,995,000 A1 (2)

Number
4 (b)(i) Award 1 mark (A1) for both healthy and
greater than a guideline figure
Based on the current ratio the liquidity of

Company C is healthy, as the current ratio is
greater than the guideline figure of 2 A1 (1)

Number
4 (b)(ii) Award 1 mark (A1) for both not healthy and
less than 1
Based on the acid test ratio the liquidity of

Company C is not healthy, as the acid test ratio is
less than the guideline figure of 1.
Accept as a reason the fact that Company C A1 (1)
cannot pay its current liabilities.

Number
4 (c)(i) Award 1 mark (M1) for both correct
subtractions
Net profit =(£1,905,000 - £1,196,000) - £243,000 M1
= £466,000 A1 (2)
ASE3003
November 2016
Number
COGS – Opening stock + Closing stock
in words or figures
Net purchases
= COGS – Opening stock + Closing stock M1
= £1,196,000 - £62,350 + £67,650
= £1,201,300 A1 (2)

Number
4 (c)(iii) Award 1 mark (M1) for
(Opening stock + Closing stock) / 2
in words or figures
Award 1 mark (M1) for COGS / Average stock
in words or figures
Average stock
= (Opening stock + Closing stock) / 2 M1
= (£62,350 + £67,650) / 2
= £65,000
Rate of stockturn = COGS / Average stock M1
= £1,196, 000 / £65,000
= 18.40 x per annum A1 (3)
ASE3003
November 2016
Number
5 (a) Award 1 mark (M1) for
500000 – (3 x 150000)
Award 1 mark (M1) for
(12 / 3) x payment still required
Payback still required after Year 3

= £500,000 – (3 x £150,000) M1
= £50,000
Expected net cash inflow in Year 4 M1
= £50,000 x 12 / 3
= £200,000 A1 (3)

Number
5 (b) Award 1 mark (M1) for 91375 / 0.731
Expected present value = £91,375 / 0.731 M1
= £125,000 A1 (2)

Number
5 (c)(i) Award 1 mark (M1) for 108120 / 120000
Discount factor = £108,120 / £120,000 M1
= 0.901 A1 (2)
ASE3003
November 2016
Number
1 / discount factor from 5(c)(i)
Award 1 mark (A1r) for 11%
Working must be shown for M1 mark.
Otherwise correct answer gets A1 only.
Reciprocal of discount factor = 1 / 0.901 M1
= 1.10988
Rate of return = 1.10988 – 1
≈ 0.11
= 11% A1r (2)

Number
5 (d) Award 1 mark (M1) for a denominator of
±136500
Award 1 mark (M1) for a fully correct
formula by either method
Internal rate of return

= (-£9,100 x 0.1) – (-£145,600 x 0.07) M1
-£9,100 – (-£145,600) M1
= 6.8% A1 (3)
Or:
Internal rate of return

= 7% + (10% - 7%) x (-£9,100) M1
(-£9,100 – (-£145,600)) M1
= 6.8% A1 (3)
ASE3003
November 2016
Number
6 (a)(i) Award 1 mark (M1) for 0.3 x 5500
Tia received = 0.3 x £5,500 M1
= £1,650 A1 (2)

Number
6 (a)(ii) Award 1 mark (M1) for 2880 / 0.3
Owed to the unsecured creditor
= £2,880 / 0.3 M1
= £9,600 A1 (2)

Number
6 (a)(iii) Award 1 mark (M1) for 0.3 x 28000 / 2
14000 + unsecured payment
Paid as an unsecured creditor = 0.3 x £28,000 / 2 M1
= £4,200
Paid in total = £14,000 + £4,200 M1
= £18,200 A1 (3)

Number
6 (b) Award 1 mark (M1) for 271500 x 0.3
53000 + 7200 + paid to unsecured creditors
Total paid to unsecured creditors
= £271,500 x 0.3 M1
= £81,450
Value of assets = £53,000 + £7,200 + £81,450 M1
= £141,650 A1 (3)
ASE3003
November 2016
Number
6 (c) Award 1 mark (M1) for
271500 + 53000, without the 7200
Award 1 mark (M1) for their answer to 6(b)
divided by their liabilities before
liquidation
Award 1 mark (A1) for 44% or more
accurate percentage figure
Liabilities before liquidation

= £271,500 + £53,000 M1
= £324,500
Assets as a percentage of liabilities

= £141,650 / £324,500 M1
= 0.4365177
= 44% A1 (3)
ASE3003
November 2016
Number
7 (a)(i) Award 4 marks for 40%
Or:
Award 1 mark (M1) for 540000 / 2500000
Award 1 mark (M1) for seeing a cube root or
a one-third power
1 minus any figure between 0 and 1
Award 1 mark (A1) for 40%
Proportional reduction in value over 3 years

M1
= £540,000 / £2,500,000
= 0.216
Proportional reduction in value over 1 year

M1
= 3√0.216
= 0.6
M1
Rate of depreciation = 1 - 0.6
A1
= 40% (4)
Or:
Award 2 marks (M2) for a fully correct
formula in figures
Award 2 marks (A2) for 40%
Rate of depreciation
= 1 - 3√(540,000 / £2,500,000)
= 40%

Number
2500000 x their answer to 7(a)(i)
Depreciation in the first year = 0.4 x £2,500,000 M1
= £1,000,000 A1 (2)
ASE3003
November 2016
Number
7 (a)(iii) Award 1 mark (M1) for
2500000 x (1 – their answer to 7(a)(i))2
Book value at the end of two years
= £2,500,000 x (0.6)2 M1
= £900,000 A1 (2)

Number
7 (b)(i) Award 1 mark (M1) for
(540000 - 20000) / 4
Annual depreciation = (£540,000 - £20,000) / 4 M1
= £130,000 A1 (2)

Number
7 (b)(ii) Award 1 mark (M1) for
20000 + their answer to 7(b)(i)
Book value at the end of year 6
= £20,000 + £130,000 M1
= £150,000 A1 (2)
ASE3003
November 2016
Number
8 (a)(i) Award 1 mark (M1) for
one Weighting x Index
Award 1 mark (M1) for adding Weightings
adding three WI figures
Award 1 mark (M1) for ∑WI / ∑W
Investment Index Weighting WI
A 114 13 1,482 M1
B 190 15 2,850
C 133 10 1,330
Totals 38 5,662 M1 M1
Composite (weighted) index = 5,662 / 38 M1
= 149 A1 (5)

Number
(of from 8(a)(i) – 100) / 5
M1
Increase per annum = (149 – 100) / 5
= 9.8 (index)
A1 (2)
= 9.8%
ASE3003
November 2016
Number
8 (b) Award 1 mark (M1) for 13 + 15 + 10 + 12
New total weighting x 143
New total weighted index minus ∑WI
Increase in weighted index / 12
New total weighting = 13 + 15 + 10 + 12 M1
= 50
New total weighted index = 50 x 143 M1
= 7,150
Increase in weighted index = 7,150 – 5,662 M1
= 1,488
Index for D = 1,488 / 12 M1
= 124 A1 (5)
TOTAL FOR PAPER = 100 MARKS
ASE3003
November 2016

LCCI L3 Advanced Business Calculations Nov 2016 - MS

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Mark Scheme

PEARSON LCCI (ASE3003) Level 3

Pearson: helping people progress, everywhere

All the material in this publication is copyright

• Mark schemes should be applied positively. Candidates must be rewarded

• Examiners should mark according to the mark scheme not according to

• There is no ceiling on achievement. All marks on the mark scheme should

• Where some judgement is required, mark schemes will provide the

Value in January 2020 = £198,000 x (1 + 0.03)4 M1

= £222,850.7(4) = £222,851 A1 (2)

Question Answer Mark

Increase in value = £222,851 - £198,000 M1

= £24,850.7(4) = £24,851 A1 (2)

Question Answer Mark

Value in January 2010 = £198,000 / (1 – 0.03)6 M1 M1

= 237,703.0(6) = £237,703 A1 (3)

Question Answer Mark

Fall in value in 2015 = £198,000 x 0.03 / 0.97 M1

Annual rate of interest = 0.00015 x 365 M1

Question Answer Mark

Interest = £2,900.35 x 0.00015 x 7 M1

= £3.0453675 = £3.05 A1r (2)

Total for Question 1 = 13 marks

Number of units purchased = £54,400 / £85 M1

Question Answer Mark

Yield per annum = £13,056 / (3 x £54,000) M1M1

Question Answer Mark

Income per unit = £13,056 / 640 M1

Question Answer Mark

Total charges paid

Charges percent = £680 / £54,400 M1

Question Answer Mark

Income net of fees = £13,056 - £680 M1

Total for Question 2 = 13 marks

Contribution = £37 - £31 M1

Units above break-even = £84,750 / £6 M1

Break-even = 96,000 – 14,125 M1

Question Answer Mark

Fixed cost per period = 81,875 x £6 M1

Question Answer Mark

Variable cost per unit

Total variable cost

Question Answer Mark

Let maximum number of units be M. M1

Then, £81,000 + £37.80 x M < £173,000 M1

£37.80 x M < £92,000

M = 2,433 units A1r (3)

Total for Question 3 = 12 marks

Current assets = 2.5 x £2,350,000 M1

Question Answer Mark

Stock = (2.5 – 0.8) x £2,350,000 M1

Question Answer Mark

Based on the current ratio the liquidity of

Question Answer Mark

Based on the acid test ratio the liquidity of

Question Answer Mark

Net profit =(£1,905,000 - £1,196,000) - £243,000 M1

= £1,196,000 - £62,350 + £67,650

Question Answer Mark

Rate of stockturn = COGS / Average stock M1

= £1,196, 000 / £65,000

= 18.40 x per annum A1 (3)

Total for Question 4 = 13 marks