BSc(HONS) Business Management Semester 1 Examination 2020/2021

UNIVERSITY OF BOLTON REGENT COLLEGE LONDON BSc(H ONS) BUSINESS MANAGEMENT SEMESTER 1, EXAMINATION 20 20 /202 1 FINANCIAL MANAGEMENT AND DECISION MAKING MODULE NO: BMP5006 Date: 5 June 2021 Time: 10 :00 am to 10 :00 pm (Submit by 10 :15pm on 5 June 2021) INSTRUCTIONS TO CANDIDATES: There are Five questions on this paper. Answer all questions. This examination is 12 hours. Another 15 minutes to submit answer booklet through Turnitin. This is a take -home examination. You must submit your MS Words electronic answer booklet via Turnitin . (Discount tables are attached at the back of this question paper) Page 2 of 8 BSc (Hons) Business Semester 1 Examination 2020 -2021 Management Accountancy and Decision Making Module No. BMP5006 Question 1 Carl Limited is considering which of three projects it should undertake. The initial investment will be £15,000, and the cost of capital is 8 %. The scrap /residual value at the end of the project period will be £2,000. The net after tax cash flows of the p rojects are as follows: Project A Project B Project C £ £ £ Year 1 4,000 5,000 4,000 Year 2 6,000 5,000 5,000 Year 3 5,000 4,000 3,000 Year 4 3,600 5,000 Year 5 1,400 Required: (a) Calculate the, the Payback Period, and the net Present Value of for each project. (12 marks) b) For each of the above methods of project appraisal recommend which project should be taken up. (2 marks) c) Using all the information gathered from the above techniques which project would you recommend giving the reasons for this decision. (2 marks) d) Explain the uses, limitations and merits of the Payback Period compared to N et Present Value in inves tment appraisal. (4 marks) (Total 2 0 Marks ) Page 3 of 8 BSc (Hons) Business Semester 1 Examination 2020 -2021 Management Accountancy and Decision Making Module No. BMP5006 Question 2 Marsh Company has provided you with the financial statements for the last two years. Marsh Company Income Statement for the year ends 2019 2020 £ 000 £ 000 Revenue 440 330 Cost of Sales (248 ) (192 ) Gross Profit 192 138 Expenses (122 ) (88) Operating Profit 70 50 Interest Payable (10) (10) Profit Before Tax 60 40 Tax (11) ( 7) Profit After Tax 49 33 Marsh Company Statement of Financial Position 201 9 20 20 £000 £000 Non -Current assets 405 36 1 Current assets: Inventory 45 28 Receivables 65 46 Cash 7 10 117 84 Payables 72 32 Net current assets 45 52 450 413 Long term loan 100 100 350 313 Capital 250 250 Retained earnings 100 63 350 313 Page 4 of 8 BSc (Hons) Business Semester 1 Examination 2020 -2021 Management Accountancy and Decision Making Module No. BMP5006 Question 2 Continued Required: (a) You are required to calculate the following ratios: (i) Gross profit margin (ii) Operating profit margin (iii) Expenses to sales (iv) Return on Capital Employed (v) Asset tu rnover (vi) Non -current asset turnover (vii) Current Ratio (viii) Quick Ratio (ix) Inventory days (x) Receivables days (xi) Payable days (xii) Interest cover (12 marks) (b) In light of your calculations comment on the performance of the company over the last two years. (8 marks) (Total Marks 2 0) Page 5 of 8 BSc (Hons) Business Semester 1 Examination 2020 -2021 Management Accountancy and Decision Making Module No. BMP5006 Question 3 Jones plc manufactures one product, and the entire product is sold as soon as it is produced. There are no opening or closing inventories and work in progress is negligible. The company operates a standard costing system and analysis of variances is made every month. The standard cost card for a product is as follows. £ Direct Materials 0.5 kilos at£4 per kilo 2.00 Direct Wages 2 hours at £8.00 per hour 16.00 Variable Overheads 2 hours at£0.30 per hour .60 Standard Variable Cost 18.60 Standard Contribution 13.40 Standard Selling Price 32.00 Budgeted output for the month of June 2015 was 5,100 units . Actual results for June 2015 were as follows: Production of 4,850 units was sold for £150,350. Materials consumed in production amounted to 2,300 kgs at a total cost of £9,800. Labour hours paid for amounted to 8,500 hours at a cost of £67,800. Actual operating hours amounted to 8,000 hours. Variable Overheads amounted to £2,600. Required: Calculate all variances and prepare an operating statement for the month ended June 2015. (Total 2 0 marks) Page 6 of 8 BSc (Hons) Business Semester 1 Examination 2020 -2021 Management Accountancy and Decision Making Module No. BMP5006 Question 4 Hardaker Limited produces and sells two products. Product A sells for £12 per unit and has a total variable cost of £7.90, while Product B sells for £17 per unit and has a total variable cost of £11.20. For every 4 units of Product A sold, three of product B are sold. Hardaker Limited fixed costs are £131,820 per period. Budgeted sales revenue for the next period is £398,500. Required : (a) Calculate the Breakeven points in Units. (5 marks) (b) Calculate the Margin of Safety in Units (5 marks) (c) Evaluate the relevance of Break Even Analysis in the modern manufacturing environment . (10 marks) (Total Marks 20) Question 5 Evaluate and detail the significant steps in setting a financial / cost controlling budget in a large organisation. (Total Marks 2 0) END OF QUESTION PAPER Present Value Table Page 7 of 8 BSc (Hons) Business Semester 1 Examination 2020 -2021 Management Accountancy and Decision Making Module No. BMP5006 Present value of 1 i.e. (1 + r)-n Where r = discount rate and n = number of periods until payment Discount rate (r) Period s (n) 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 1 0.99 0 0.98 0 0.97 1 0.96 2 0.95 2 0.94 3 0.93 5 0.92 6 0.91 7 0.90 9 2 0.98 0 0.96 1 0.94 3 0.92 5 0.90 7 0.89 0 0.87 3 0.85 7 0.84 2 0.82 6 3 0.97 1 0.94 2 0.91 5 0.88 9 0.86 4 0.84 0 0.81 6 0.79 4 0.77 2 0.75 1 4 0.96 1 0.92 4 0.88 8 0.85 5 0.82 3 0.79 2 0.76 3 0.73 5 0.70 8 0.68 3 5 0.95 1 0.90 6 0.86 3 0.82 2 0.78 4 0.74 7 0.71 3 0.68 1 0.65 0 0.62 1 6 0.94 2 0.88 8 0.83 7 0.79 0 0.74 6 0.70 5 0.66 6 0.63 0 0.59 6 0.56 4 7 0.93 3 0.87 1 0.81 3 0.76 0 0.71 1 0.66 5 0.62 3 0.58 3 0.54 7 0.51 3 8 0.92 3 0.85 3 0.78 9 0.73 1 0.67 7 0.62 7 0.58 2 0.54 0 0.50 2 0.46 7 9 0.91 4 0.83 7 0.76 6 0.70 3 0.64 5 0.59 2 0.54 4 0.50 0 0.46 0 0.42 4 10 0.90 5 0.82 0 0.74 4 0.67 6 0.61 4 0.55 8 0.50 8 0.46 3 0.42 2 0.38 6 11 0.89 6 0.80 4 0.72 2 0.65 0 0.58 5 0.52 7 0.47 5 0.42 9 0.38 8 0.35 0 12 0.88 7 0.78 8 0.70 1 0.62 5 0.55 7 0.49 7 0.44 4 0.39 7 0.35 6 0.31 9 13 0.87 9 0.77 3 0.68 1 0.60 1 0.53 0 0.46 9 0.41 5 0.36 8 0.32 6 0.29 0 14 0.87 0 0.75 8 0.66 1 0.57 7 0.50 5 0.44 2 0.38 8 0.34 0 0.29 9 0.26 3 15 0.86 1 0.74 3 0.64 2 0.55 5 0.48 1 0.41 7 0.36 2 0.31 5 0.27 5 0.23 9 (n) 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% Page 8 of 8 BSc (Hons) Business Semester 1 Examination 2020 -2021 Management Accountancy and Decision Making Module No. BMP5006 1 0.901 0.893 0.885 0.877 0.870 0.862 0.855 0.847 0.840 0.833 2 0.812 0.797 0.783 0.769 0.756 0.743 0.731 0.718 0.706 0.694 3 0.731 0.712 0.693 0.675 0.658 0.641 0.624 0.609 0.593 0.579 4 0.659 0.636 0.613 0.592 0.572 0.552 0.534 0.516 0.499 0.482 5 0.594 0.567 0.543 0.519 0.497 0.476 0.456 0.437 0.419 0.402 6 0.535 0.507 0.480 0.456 0.432 0.410 0.390 0.370 0.352 0.335 7 0.482 0.452 0.425 0.400 0.376 0.354 0.333 0.314 0.296 0.279 8 0.434 0.404 0.376 0.351 0.327 0.305 0.285 0.266 0.249 0.233 9 0.391 0.361 0.333 0.308 0.284 0.263 0.243 0.225 0.209 0.194 10 0.352 0.322 0.295 0.270 0.247 0.227 0.208 0.191 0.176 0.162 11 0.317 0.287 0.261 0.237 0.215 0.195 0.178 0.162 0.148 0.135 12 0.286 0.257 0.231 0.208 0.187 0.168 0.152 0.137 0.124 0.112 13 0.258 0.229 0.204 0.182 0.163 0.145 0.130 0.116 0.104 0.093 14 0.232 0.205 0.181 0.160 0.141 0.125 0.111 0.099 0.088 0.078 15 0.209 0.183 0.160 0.140 0.123 0.108 0.095 0.084 0.074 0.065