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Paper 2

This document contains the answers to 10 multiple choice questions about business topics like balanced scorecards, cost classification, and break even analysis. It also includes 2 case studies calculating NPV and payback period for investment projects and analyzing variances in actual vs standard income statements. The key information provided includes calculations of NPV, payback period, sales, costs, profits, variances, and recommendations for which project to select based on financial analysis.

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30 views5 pages

Paper 2

This document contains the answers to 10 multiple choice questions about business topics like balanced scorecards, cost classification, and break even analysis. It also includes 2 case studies calculating NPV and payback period for investment projects and analyzing variances in actual vs standard income statements. The key information provided includes calculations of NPV, payback period, sales, costs, profits, variances, and recommendations for which project to select based on financial analysis.

Uploaded by

dua95960
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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PAPER 2

SECTION A

Q1

A- FALSE
B- FALSE

Q2 True

Q3 False.

A Balanced Scorecard is more than a financial snapshot; it's a strategic management tool that
considers various aspects beyond finances.

Q4 False.

Price skimming involves starting with high prices and gradually lowering them as the product
becomes more established in the market.

Q5

Avoidable costs can be eliminated by choosing an alternative course of action, impacting


decisions. Irrelevant costs don't affect decisions and remain constant regardless of
the choice made.

Q6

a- Sales 45000 * 275 = 12375000


b- Profit margin = 12375000 * 25% = 3093750
c- Cost = 12375000 – 3093750 = 9281250
d- Cost pu = 9281250 / 45000 = 206.25

Q7

Asset turnover = 180000/ 50000+32400 = 2.18

Profit margin =32400 / 180000 * 100 = 18%

Roi = 32400 / 50000 * 100 = 64.8%


Q8

Sales = 18000

Margin of cost 20% =

Sales = 100% cost + 20% profit

Cost = 18000 / 1.2 = 15000

Profit = 18000 – 15000 = 3000

Q9

Cm = 29.99 – 11.99 = 18

Fc = 280+1220+750 = 2250

Bep = 2250 / 18 = 125 units

Q10

There are three techniques in Total Productive Maintenance (TPM) include

Autonomous Maintenance

Planned Maintenance

Focused Improvement

These aim to enhance equipment effectiveness, reduce breakdowns, and involve all employees in
maintenance activities.

Section b

B2

NORDIC BLUE

Years FLOW FACTOR PV CCF


0 -63000 1 -63000 -63000
1 27000 0.90909 24545.45455 -36000
2 24000 0.82645 19834.71074 -12000
3 18000 0.75131 13523.66642 6000
4 18000 0.68301 12294.2422 24000
5 15000 0.62092 9313.819846 39000
NPV 16511.89375

NPV = 16511.90

PAYBACK PERIOD = 2+ (12000/18000)

= 2+ 0.66666 = 2.67 YEARS

PINK PEACH

years cf pv 10% pv ccf


0 -66000 1 -66000 -66000
1 36000 0.90909 32727.3 -30000
2 30000 0.82645 24793.4 0
3 21000 0.75131 15777.6 21000
4 6000 0.68301 4098.08 27000
5 3000 0.62092 1862.76 30000
NPV 13259.1
PBP 2 years

NPV = 13259.10

PAYBACK PERIOD = 2 YEARS

Mutually exclusive projects: If the NPV of one project is greater than the NPV of the other
project, accept the project with the higher NPV. Therefore we should choose the NORDIC BLUE
because of high NPV value.

NPV

ADVANTAGE

NPV considers the time value of money, it helps understand the future cash flow in the present
time

DISADVANTAGE
NPV is hard to estimate accurately, does not fully account for opportunity cost

PAYBACK PERIOD

ADVANTAGE

The payback period is straightforward to understand and easy to calculate, making it useful for
quick assessments and comparisons between projects.
DISADVANTAGE

Payback ignores the time value of money.

B3

STANDARD STATEMENT
TOTAL
SALES 850000
mat 380800
lab 204000
vfoh 122400
VC 707200
CM 142800
FC 34000
PROFIT 108800

ACTUAL INCOME STATEMENT

ACTUTAL
STATEMENT TOTAL

SALES 910000
mat 386750
lab 192500
vfoh 122400
VC 701650
CM 208350
FC 34000
PROFIT 174350
C

MATERIAL VARIANCE

PRICE = 45500 *0.5 = 22750 UF

USAGE = 8* -3500 = -28000 F

LABOR VARIANCE

RATE = 19250 * 0 = 0

USAGE = 10 * -1750 = - 17500 F

TOTAL VARIANCE = -5250

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