Paper P1 Performance Operations Post Exam Guide September 2010 Exam

Size: px
Start display at page:

Download "Paper P1 Performance Operations Post Exam Guide September 2010 Exam"

Transcription

1 General Comments This was the second sitting of the new P1 syllabus and candidate performance was generally better than that achieved in the May diet. There were however still core areas of the syllabus where candidates demonstrated a lack of understanding and preparation. It is essential that candidates revise the entire syllabus rather than relying on particular topic areas being included in the paper. As stated in the May 2010, an integral part of the revision process should be practising questions from past P1, P2 and P7 papers, including a comparison of the candidate s answer to the examiner s suggested answers. It was apparent however that many candidates had not taken this advice, even to the extent of reviewing the May 2010 exam paper, the examiner s answers and. The answers given by many candidates in this sitting continued to demonstrate poor exam preparation, particularly for those topics from the new areas of the syllabus. The layouts for numerical answers once again fell short of the standard required. Candidates place themselves at a disadvantage if they do not provide a clear layout for their workings in numeric questions. The quality of answers to discursive questions varied considerably between questions. Many candidates demonstrated a clear understanding of zero based budgeting but few appeared to understand what backflush cost accounting involves and were therefore unable to explain why this system would be more appropriate in a JIT environment. In some questions candidates did not provide sufficiently detailed explanations of points made; however in other questions full explanations were given even though candidates were asked to state rather than explain. It is essential that candidates consider the verb used in the question. The list of verbs and their definitions is printed in every CIMA examination paper. Candidates are again reminded of the importance of time management. The exam allows 1.8 minutes per mark and candidates should relate the time they spend on each question to the marks available. Spending a disproportionate amount of time on sections A and B to the detriment of section C is not effective time management. Full use should be made of the 20 minutes reading time at the beginning of the examination. The Chartered Institute of Management Accountants Page 1

2 Section A 20 marks ANSWER ALL EIGHT SUB-QUESTIONS IN THIS SECTION Question 1.1 Which ONE of the following is NOT considered to be a cost of holding inventory? A B C D Loss of goodwill as a result of being unable to complete customer orders due to lack of inventory Insurance cost of inventory Storage cost of inventory Interest on cash invested in inventory (2 marks) The correct answer is A Question 1.2 The following information has been calculated for a business: Trade receivables collection period Trade payables payment period 54 days 67 days If the working capital cycle is 102 days, the inventory turnover period is A B C D 19 days 115 days 89 days 13 days (2 marks) The correct answer is B Workings ( ) = 115 days The Chartered Institute of Management Accountants Page 2

3 Question 1.3 A project requires an initial investment of $200,000. It has a life of five years and generates net cash inflows in each of the five years of $55,000. The net present value of the project when discounted at the company s cost of capital of 8% is $19,615. The sensitivity of the investment decision to a change in the annual net cash inflow is: A 35.7% B 25.0% C 9.8% D 8.9% (2 marks) The correct answer is D Workings $19,615/$219,615 = 8.9% The Chartered Institute of Management Accountants Page 3

4 The following data are given for sub-questions 1.4 and 1.5 below A company can choose from four mutually exclusive investment projects. The net present value of the projects will depend on market conditions. The table below details the net present value for each possible outcome: Market conditions Projects A B C D Poor $400,000 $700,000 $450,000 $360,000 Average $470,000 $550,000 $500,000 $400,000 Good $600,000 $300,000 $800,000 $550,000 Question 1.4 If the company applies the maximin rule it will invest in: A B C D Project A Project B Project C Project D (2 marks) The correct answer is C Workings If the maximin rule is applied, the highest of the worst profit for each of the three projects is $450,000 i.e. project C. The Chartered Institute of Management Accountants Page 4

5 Question 1.5 If the company applies the minimax regret rule it will invest in: A B C D Project A Project B Project C Project D (2 marks) The correct answer is C Workings Market Conditions Minimax Regret Table Projects A B C D Poor ($300,000) 0 ($250,000) ($340,000) Average ($80,000) 0 ($50,000) ($150,000) Good ($200,000) ($500,000) 0 ($250,000) The maximum regret for Project A is $300,000 The maximum regret for Project B is $500,000 The maximum regret for Project C is $250,000 The maximum regret for Project D is $340,000 Therefore if the company wants to minimise the maximum regret it will invest in project C. The Chartered Institute of Management Accountants Page 5

6 Question 1.6 PJ sells goods to customers on credit. It is forecast that credit sales for July will be $36,000 and that sales will increase by $2,000 per month for the next six months. Based on past experience PJ expects 50% of customers to pay in the month after sale, 25% of customers to pay 2 months after sale and the remainder to pay 3 months after sale. PJ has a trade receivables balance outstanding at the beginning of July of $65,000. Calculate the cash that PJ will receive from credit customers during the six month period to the end of December. (3 marks) Workings Credit sales July Aug Sept Oct Nov Dec Total 36,000 38,000 40,000 42,000 44,000 46, ,000 Cash Collected: $ Outstanding receivables June 65,000 Credit sales 246, ,000 Less receivables at 31 December 100% December credit sales (46,000) 50% November credit sales (22,000) 25% October credit sales Total cash collected (10,500) 232,500 The Chartered Institute of Management Accountants Page 6

7 Question 1.7 The estimated production volume of a new product for the first year is 2,000 units. The management accountant has produced the following table showing the possible production costs and their associated probabilities at this level of output. The probabilities of the different levels of fixed production costs and variable production costs are totally independent. (i) (ii) Total fixed production costs Total variable production costs $ Probability $ Probability 80, , , , , , Calculate the expected value of total production costs for the production of 2,000 units. Calculate the probability of total production costs for 2,000 units being $180,000 or greater. (4 marks) Workings (i) The expected value of fixed costs is: ($80,000 x 0.40) + ($130,000 x 0.45) + ($160,000 x 0.15) = $114,500 The expected value of variable costs is: ($30,000 x 0.25) + ($40,000 x 0.35) + ($50,000 x 0.40) = $41,500 The expected value of total costs is therefore $114,500 + $41,500 = $156,000 (ii) Alternatively: $ $ $ 130, ,000 = 180,000 Joint probability is (0.45 x 0.40) = , ,000 = 190,000 Joint probability is (0.15 x 0.25) = , ,000 = 200,000 Joint probability is (0.15 x 0.35) = , ,000 = 210,000 Joint probability is (0.15 x 0.40) = $130,000 + $50,000 = $180,000 Joint probability is (0.45 x 0.40) = At fixed costs of $160,000, total costs are all greater than $180,000 therefore probability is = The probability is 33%. The Chartered Institute of Management Accountants Page 7

8 Question 1.8 A $1,000 bond has a coupon rate of 10% per annum and will repay its face value in five years time. Similar bonds have a yield to maturity of 8% per annum. Calculate the current expected market value of the bond. (3 marks) (Total for Section A = 20 marks) Workings Yield to maturity of similar bonds is 8%, therefore use 8% as the discount rate. Cashflows $ Discount 8% PV of cashflows $ Year Year 5 1, PV 1, The expected market value of the bond is therefore $1, The Chartered Institute of Management Accountants Page 8

9 Section B 30 marks ANSWER ALL SIX SUB-QUESTIONS. YOU SHOULD SHOW YOUR WORKINGS AS MARKS ARE AVAILABLE FOR THE METHOD YOU USE Question 2(a) JP has been offered credit terms by a supplier that will allow JP to claim a cash discount of 2.5% if payment is made within 15 days of the date of the invoice or to pay on normal credit terms within 45 days of the date of the invoice. Required: (i) (ii) Calculate, to the nearest 0.1%, the effective annual interest rate offered to JP from accepting the cash discount and paying within 15 days. You should assume a 365 day year and use compound interest methodology. (3 marks) State TWO other methods that the supplier could use to reduce its level of outstanding trade receivables. (2 marks) (Total for sub-question (a) = 5 marks) Rationale The question examines the candidates ability to calculate the effective rate of interest of accepting a cash discount and paying an invoice early. It also examines the ability to identify other methods that a supplier could use to reduce the level of outstanding trade receivables. Suggested Approach Identify the number of days earlier that the debt will be paid. This will then be used as the compound factor in calculating the effective rate of interest being offered by the supplier. Recognise that the cost of the discount is 2.5% of the amount paid i.e. 97.5%. Suggest two other methods that could be used to reduce the level of trade receivables. Marking Guide (i) Number of compounding periods 1.00/0.975 or 1 + (0.025/0.975) Application of formula to derive percentage annual interest rate to 0.1% (ii) per valid method Maximum marks awarded Marks 2 marks 5 marks The Chartered Institute of Management Accountants Page 9

10 Examiner s comments This question was reasonably well answered with many candidates receiving full marks. In part (b) most candidates managed to state two other methods of reducing outstanding trade receivables however a number failed to note the word other in the question and suggested offering an early payment discount. Common errors 1. Failure to follow the instructions to calculate to the nearest 0.1% 2. Calculation of the number of compounding periods as 365/15 The Chartered Institute of Management Accountants Page 10

11 Question 2(b) BB manufactures a range of electronic products. The supplier of component Y has informed BB that it will offer a quantity discount of 1.0% if BB places an order of 10,000 components or more at any one time. Details of component Y are as follows: Cost per component before discount $2.00 Annual purchases 150,000 components Ordering costs $360 per order Holding costs $3.00 per component per annum Required: (i) Calculate the total annual cost of holding and ordering inventory of component Y using the economic order quantity and ignoring the quantity discount. (2 marks) (ii) Calculate whether there is a financial benefit to BB from increasing the order size to 10,000 components in order to qualify for the 1.0% quantity discount. (3 marks) (Total for sub-question (b) = 5 marks) Rationale The question examines candidates ability to apply the EOQ formula and to calculate the cost of holding and ordering the suggested level of inventory. The question then requires candidates to consider whether it is worth accepting a bulk quantity discount for placing an order greater than the EOQ. Suggested Approach Calculate the EOQ and then apply this figure to calculate the cost of holding and ordering inventory. Calculate the cost of holding and ordering inventory at the higher order level Compare the incremental cost to the incremental benefit from the quantity discount. Marking Guide Marks (i) EOQ Holding costs ½ mark Ordering costs ½ mark (ii) Holding costs ½ mark Ordering costs Value of discount Evaluation of financial benefit ½ mark Maximum marks awarded 5 marks The Chartered Institute of Management Accountants Page 11

12 Examiner s comments Overall the answers to this question were good. Part (i) was well done although many candidates could not calculate holding costs and did not seem to notice that a holding cost of $450,000 was more than the cost of the components. Many candidates struggled with part (ii), using the EOQ in this part of the answer and failing to calculate the financial benefit. Common errors 1. Lack of recognition that the EOQ will result in equal values for holding and ordering costs. 2. Calculating holding cost as $450,000 or $18, Using the EOQ in part ii). 4. Careless arithmetical errors. 5. Failure to calculate the financial benefit. The Chartered Institute of Management Accountants Page 12

13 Question 2(c) Explain why a backflush cost accounting system may be considered more appropriate than a traditional cost accounting system, in a company that operates a just-in-time production and purchasing system. (5 marks) Rationale The question examines candidates ability to explain the benefits of using backflush cost accounting compared to a traditional cost accounting system in a company that operates just in time production and purchasing. Suggested Approach Explain how a traditional cost accounting system operates. Explain what a backflush cost accounting system is and how it operates. Explain the benefits of using backflush cost accounting when just in time purchasing and production is being used A good answer will clearly identify and explain why a backflush cost accounting system is more appropriate than a traditional cost accounting system where JIT purchasing and production is being used. A weak answer will explain backflush costing but will not explain how this differs from a traditional costing system and why it would be preferable where JIT purchasing and production is in operation. Marking Guide Up to 2 marks per valid point Maximum marks awarded Marks Max 5 marks 5 marks Examiner s comments This question was particularly badly answered. Many candidates explained what a JIT environment involves but were unable to explain backflush cost accounting and why it would be more appropriate than a traditional costing system in a JIT environment. Common errors 1. Failure to answer the question that was asked. 2. Providing general statements rather than explaining specific points. The Chartered Institute of Management Accountants Page 13

14 Question 2(d) XY, a not-for-profit charity organisation which is funded by public donations, is concerned that it is not making the best use of its available funds. It has carried out a review of its budgeting system and is considering replacing the current system with a zero-based budgeting system. Explain the potential advantages AND disadvantages for the charity of a zero-based budgeting system. (5 marks) Rationale The question examines candidates ability to identify and explain the advantages and disadvantages of zero based budgeting. Suggested Approach A good answer will clearly identify and explain why zero based budgeting results in a more accurate budget while recognising the difficulties inherent in a zero based budgeting system. A weak answer will not clearly identify the advantages of zero based budgeting and/or not recognise the difficulties in its implementation. Marking Guide Up to 2 marks per valid point Maximum marks awarded Marks Max 5 marks 5 marks Examiner s comments This question was fairly straight forward and was well answered with many candidates achieving full marks. Common errors 1. Providing general statements rather than explaining specific points. 2. Lack of detail in the answers. 3. Repetition of the same point a number of times. The Chartered Institute of Management Accountants Page 14

15 Question 2(e) QR uses an activity based budgeting (ABB) system to budget product costs. It manufactures two products, product Q and product R. The budget details for these two products for the forthcoming period are as follows: Product Q Product R Budgeted production (units) 80, ,000 Number of machine set ups per batch 4 2 Batch size (units) 5,000 4,000 The total budgeted cost of setting up the machines is $74,400. Required: (i) Calculate the budgeted machine set up cost per unit of product Q. (ii) State TWO potential benefits of using an activity based budgeting system. (3 marks) (2 marks) (Total for sub-question (e) = 5 marks) Rationale The question examines candidates ability to apply activity based budgeting to calculate budgeted product costs. Suggested Approach Calculate the cost driver rate i.e. the budgeted cost per set up. Apply this rate to product Q to calculate the total set up cost for product Q. Calculate the set up costs per unit by dividing the total set up cost for product Q by the number of units of product Q. Marking Guide (i) Number of batches for each product Total number of set ups Budgeted cost per set up Total budgeted set up costs Budget set up costs per unit (ii) for each valid benefit Maximum marks awarded Marks ½ mark ½ mark ½ mark ½ mark 2 marks 5 marks The Chartered Institute of Management Accountants Page 15

16 Examiner s comments The performance in this question was particularly poor. Activity based costing is a core part of the P1 syllabus and the failure of many candidates to demonstrate the ability to apply activity based costing techniques to a simple budgeting question was very concerning. In part (i) candidates failed to recognise the need to calculate the cost driver rate for the whole company and then apply this to product Q. In part (ii) most candidates related their answer to activity based costing. Common errors 1. Calculation of cost driver rate using either the number of batches or the number of set ups per batch. 2. Calculation of budgeted set up costs per batch rather than per unit. 3. Failure to calculate the cost driver rate for the whole company. 4. Poor layout of workings. 5. Relating the answer to ABC rather than ABB. The Chartered Institute of Management Accountants Page 16

17 Question 2(f) (f) A university is trying to decide whether or not to advertise a new post-graduate degree programme. The number of students starting the programme is dependent on economic conditions. If conditions are poor it is expected that the programme will attract 40 students without advertising. There is a 60% chance that economic conditions will be poor. If economic conditions are good it is expected that the programme will attract only 20 students without advertising. There is a 40% chance that economic conditions will be good. If the programme is advertised and economic conditions are poor, there is a 65% chance that the advertising will stimulate further demand and student numbers will increase to 50. If economic conditions are good there is a 25% chance the advertising will stimulate further demand and numbers will increase to 25 students. The profit expected, before deducting the cost of advertising, at different levels of student numbers are as follows: Number of students Profit $ 15 (10,000) 20 15, , , , , , ,000 The cost of advertising the programme will be $15,000. Required: Demonstrate, using a decision tree, whether the programme should be advertised. (5 marks) Rationale The question examines candidates ability to use decision trees to evaluate a decision where there is uncertainty regarding expected cash flows. Suggested Approach Establish the decision that has to be made Draw the decision tree showing each of the possible outcomes. Calculate the expected value of each of the possible outcomes. A good answer will provide a clearly constructed decision tree showing the expected payoffs for each possible outcome. The Chartered Institute of Management Accountants Page 17

18 Marking Guide ½ mark per payoff Decision tree format Decision Maximum marks awarded Marks 3 marks 5 marks Examiner s comments This question clearly separated those candidates who had worked on the May exam paper from those who had not. The question was very similar to the one asked in May and yet it was badly answered by many candidates and a large number omitted it altogether. Many candidates seemed to think that the decision was what the economic conditions were going to be. Other candidates misread the question and ended up with a decision tree with only five branches instead of six and wrote a note to the examiner that the question was incorrect. Some candidates drew the decision tree but did not calculate any figures. Common errors 1. Drawing the decision tree on the basis that the decision was to determine the economic conditions. 2. Producing a decision tree with four or five branches rather than six. 3. Giving no figures for the decision tree. 4. Failing to state the final decision. 5. Making computational errors. The Chartered Institute of Management Accountants Page 18

19 Section C 50 marks ANSWER BOTH THE TWO QUESTIONS Question 3 (a) Produce a statement that reconciles the budgeted and actual gross profit for product RG for July showing the variances in as much detail as possible. (13 marks) (b) Calculate the following materials variances for August: (i) The total materials cost variance. (ii) The planning variance for materials price. (iii) The operational variances for materials price and materials usage. (6 marks) (c) Discuss THREE advantages of using a standard costing system that identifies both planning and operational variances. (6 marks) (Total for Question Three = 25 marks) Rationale The question examines candidates ability to calculate variances including both planning and operational variances and to prepare a statement reconciling the budget and actual gross profit. The advantages of identifying both planning and operational variances are also examined. Suggested Approach Calculate each of the individual variances, clearly identifying whether they are adverse or favourable Calculate the actual profit for the period. Produce a statement showing the budgeted profit and the individual variances reconciling to the actual profit. Calculate the planning and operational variances in part (b) Explain the benefits of calculating these figures in part (c). A good answer will calculate the variances and actual profit correctly and will produce a clear reconciliation statement. A weak answer will contain errors in the calculation of variances, will not identify correctly whether the variances are adverse or favourable, will not calculate the actual profit separately and will not produce a clear reconciliation statement. The Chartered Institute of Management Accountants Page 19

20 Marking Guide Part (a) Budgeted gross profit Sales variances Material variances Labour variances Variable overhead variances Fixed overhead variances Actual gross profit Marks 3 marks 2 marks 2 marks 3 marks s Part (b) (i) Materials cost variance (ii) Material price planning variance (iii) Material price operational variance Material usage operational variance 2 marks 2 marks Part (c) Up to 2 marks per reason Maximum marks awarded 6 marks 25 marks Examiner s comments Part (a) Candidates performed fairly well in this part of the question. The variances which caused difficulty were the sales volume profit variance and the fixed overhead volume variance. Some candidates provided the total fixed overhead variance rather than analysing this further to show the expenditure variance and the volume variance. Part (b) This part was less well answered. Few candidates were able to calculate a materials cost variance and many calculated a price variance instead. The planning variance was seldom calculated correctly and the operational usage variance caused a lot of difficulty. Overall there was evidence of a lack of knowledge in this area. Part (c) This part was poorly answered. Most candidates discussed standard costing systems without reference to planning and operational variances. When planning and operational variances were considered there was a lack of detail in the points made. Common errors Part (a) 1. Incorrect labelling of variances. 2. Confusion over the calculation and labelling of the fixed overhead variances. 3. Use of incorrect variance signs (adverse/favourable) for the direction of variances, especially with the fixed overhead variances. 4. Incorrect calculation of the sales volume profit variance. 5. Not providing a reconciliation statement. Part (b) 1. Calculation of a material price variance rather than a materials cost variance. 2. Calculation of the material planning variance using actual quantity. 3. Incorrect calculation of the material usage variance. Part (c) 1. Not answering the question that was asked. Lack of detail in the answers. The Chartered Institute of Management Accountants Page 20

21 Question 4 (a) Calculate the net present value (NPV) of the gymnasium and spa project. (16 marks) (b) Calculate the post-tax money cost of capital at which the hotel would be indifferent to accepting / rejecting the project. (4 marks) (c) Discuss an alternative method for the treatment of inflation that would result in the same NPV. Your answer should consider the potential difficulties in using this method when taxation is involved in the project appraisal. (5 marks) (Total for Question Four = 25 marks) Rationale Part (a) of the question examines candidates ability to calculate the net present value of a project involving the identification of relevant costs and the calculation of the effect of inflation and taxation. Part (b) examines candidates ability to calculate the IRR of a project. Part (c) examines the candidates understanding of the treatment of inflation in investment appraisal. Suggested Approach In part (a) firstly identify the incremental cash flows of the project then calculate the tax effect of the cash flows taking account of the timing of the tax payments. Discount the resultant net cash flows at the company s cost of capital. In part (b) calculate the IRR of the project. In part (c) calculate the real discount rate which could be applied to cash flows that were not adjusted for inflation. Also demonstrate appreciation of the problem involved with this approach where there are tax implications of the appraisal. The Chartered Institute of Management Accountants Page 21

22 Marking Guide Part (a) Current revenue Future projected revenue Incremental revenue Employee costs Overhead costs Adjusting net cash flows for inflation Residual value Tax calculations and phasing of cash flows Discounting cash flows Marks 3 marks 2 marks 4 marks 2 marks Part (b) Recognising need for an IRR calculation Calculating NPV at higher/lower discount rate Calculating IRR 2 marks Part (c) Explanation of alternative approach Formula to calculate real cost of capital Calculation of real cost of capital Explanation of problems where taxation is involved Up to 2 marks Examiner s comments Part (a) This part of the question was reasonably well answered although many candidates did not seem to recognise that only the incremental revenue was relevant. Similarly many candidates included the absorbed fixed overheads as a relevant cash flow. Most candidates were able to calculate the tax depreciation for years 1-3 but often calculated the balancing figure for year 4 incorrectly. Part (b) Candidates that recognised the need for an IRR calculation scored well in this part of the question but many candidates did not understand what was required. Some candidates gave the answer to part c) instead. Part (c) This part of the question was omitted by many candidates. Those who did attempt it were usually able to give the formula to calculate the real cost of capital but many did not then go on to calculate it. Explanations given for the difficulties in using this method when taxation is involved were vague and did not demonstrate any clear understanding. Common errors Part (a) 1. Failure to calculate incremental revenue. 2. Inclusion of non-relevant costs in the cash flows. 3. Omission of the residual value from the cash flows. 4. Use of 365 days in the calculation of revenue. 5. Incorrect calculation of Year 4 tax depreciation. 6. Incorrect phasing of the benefit from the tax depreciation. Part (b) 1. Failure to recognise the need to calculate the project IRR. The Chartered Institute of Management Accountants Page 22

23 Part (c) 1. Lack of knowledge of the topic area. 2. General statements that did not demonstrate a clear understanding. The Chartered Institute of Management Accountants Page 23

Paper P1 Performance Operations Post Exam Guide September 2013 Exam. General Comments

Paper P1 Performance Operations Post Exam Guide September 2013 Exam. General Comments General Comments This sitting produced a slightly disappointing pass rate, towards the lower end compared to previous sittings. Whilst the overall performance of candidates was disappointing, it was encouraging

More information

Paper P1 Performance Operations Post Exam Guide September 2011 Exam. General Comments

Paper P1 Performance Operations Post Exam Guide September 2011 Exam. General Comments General Comments Performance on this paper was better than in previous sittings mainly as a result of improved performance in Sections A and B. Candidates scored better on average in the multiple choice

More information

Paper P1 Performance Operations Post Exam Guide March 2011 Exam. General Comments

Paper P1 Performance Operations Post Exam Guide March 2011 Exam. General Comments General Comments Performance overall in March 2011 was comparable to the September 2010 diet. While the pass rate was acceptable, it could have been significantly improved if candidates had worked through

More information

Questions 1, 3 and 4 gained reasonable average marks, whereas Question 2 was poorly answered, especially parts (b),(c) and (f).

Questions 1, 3 and 4 gained reasonable average marks, whereas Question 2 was poorly answered, especially parts (b),(c) and (f). General Comments This sitting produced a reasonable pass rate for a resit paper although there was a large variation in pass rates between centres. It was clear that well-prepared candidates did not have

More information

This sitting produced a good pass rate. High average marks were achieved on Questions 1, 2 and 3 in particular.

This sitting produced a good pass rate. High average marks were achieved on Questions 1, 2 and 3 in particular. General comments This sitting produced a good pass rate. High average marks were achieved on Questions 1, 2 and 3 in particular. It was clear that well prepared candidates did not have difficulty completing

More information

Performance Pillar. P1 Performance Operations. Wednesday 28 August 2013

Performance Pillar. P1 Performance Operations. Wednesday 28 August 2013 P1 Performance Operations DO NOT OPEN THIS QUESTION PAPER UNTIL YOU ARE TOLD TO SO Performance Pillar P1 Performance Operations Wednesday 28 August 2013 Instructions to candidates You are allowed three

More information

P1 Performance Operations September 2012 examination

P1 Performance Operations September 2012 examination Operational Level Paper P1 Performance Operations September 2012 examination Examiner s Answers Note: Some of the answers that follow are fuller and more comprehensive than would be expected from a well-prepared

More information

Management Accounting 2 nd Year Examination

Management Accounting 2 nd Year Examination Management Accounting 2 nd Year Examination August 2013 Exam Paper, Solutions & Examiner s Report NOTES TO USERS ABOUT THESE SOLUTIONS The solutions in this document are published by Accounting Technicians

More information

Management Accounting 2 nd Year Examination

Management Accounting 2 nd Year Examination Management Accounting 2 nd Year Examination August 2012 Exam Paper, Solutions & Examiner s Report NOTES TO USERS ABOUT THESE SOLUTIONS The solutions in this document are published by Accounting Technicians

More information

Candidates did not perform well on this paper. Many seemed to lack knowledge of even the basic concepts of costing and management accounting.

Candidates did not perform well on this paper. Many seemed to lack knowledge of even the basic concepts of costing and management accounting. General Comments Candidates did not perform well on this paper. Many seemed to lack knowledge of even the basic concepts of costing and management accounting. Poor and inexact expression also marred scripts.

More information

CIMA Chartered Management Accounting Qualification 2010

CIMA Chartered Management Accounting Qualification 2010 CIMA Chartered Management Accounting Qualification 2010 Student Support Guide Paper P1 Performance Operations Introduction This guide outlines matters to be considered by those wishing to sit the examination

More information

C02-Fundamentals of financial accounting

C02-Fundamentals of financial accounting Sample Exam Paper Question 1 The difference between an income statement and an income and expenditure account is that: A. An income and expenditure account is an international term for an Income statement.

More information

Examiner s report F9 Financial Management June 2011

Examiner s report F9 Financial Management June 2011 Examiner s report F9 Financial Management June 2011 General Comments Congratulations to candidates who passed Paper F9 in June 2011! The examination paper looked at many areas of the syllabus and a consideration

More information

Foundations in Financial Management (FFM) September 2016 to June 2017

Foundations in Financial Management (FFM) September 2016 to June 2017 Foundations in Financial Management (FFM) September 2016 to June 2017 This syllabus and study guide is designed to help with teaching and learning and is intended to provide detailed information on what

More information

Capital Investment Appraisal Techniques

Capital Investment Appraisal Techniques Capital Investment Appraisal Techniques To download this article in printable format click here A practising Bookkeeper asked me recently how and by what methods one would appraise a proposed investment

More information

JUNE 2012 EXAMINATION. D2. Business Finance. Answer ALL THREE questions. Question 1: 20 marks available. Question 2: 30 marks available

JUNE 2012 EXAMINATION. D2. Business Finance. Answer ALL THREE questions. Question 1: 20 marks available. Question 2: 30 marks available 1 JUNE 2012 EXAMINATION D2. Business Finance Instructions to candidates 1. Time allowed is 3 hours and 10 minutes, which includes 10 minutes reading time. 2. This is a closed book examination. 3. Use of

More information

Interpretation of Financial Statements

Interpretation of Financial Statements Interpretation of Financial Statements Author Noel O Brien, Formation 2 Accounting Framework Examiner. An important component of most introductory financial accounting programmes is the analysis and interpretation

More information

Examiner s report F8 Audit & Assurance September 2015

Examiner s report F8 Audit & Assurance September 2015 Examiner s report F8 Audit & Assurance September 2015 General Comments There were two sections to the examination paper and all the questions were compulsory. Section A consisted of 12 multiple-choice

More information

MANAGEMENT ACCOUNTING

MANAGEMENT ACCOUNTING CIPFA PROFESSIONAL QUALIFICATION CIPFA CERTIFICATE IN INTERNATIONAL PUBLIC FINANCIAL MANAGEMENT MANAGEMENT ACCOUNTING Instructions to candidates There are two sections in the examination. Section A contains

More information

KB 2 Business Management Accounting Suggested Answers and Marking Guide

KB 2 Business Management Accounting Suggested Answers and Marking Guide KB 2 Business Management Accounting Suggested Answers and 1 SECTION 1 Question 01 Relevant learning outcome/s: 1.1.1 Assess the key features of the absorption costing method and the ABC method. 1.1.2 Demonstrate

More information

Paper F9. Financial Management. Fundamentals Pilot Paper Skills module. The Association of Chartered Certified Accountants

Paper F9. Financial Management. Fundamentals Pilot Paper Skills module. The Association of Chartered Certified Accountants Fundamentals Pilot Paper Skills module Financial Management Time allowed Reading and planning: Writing: 15 minutes 3 hours ALL FOUR questions are compulsory and MUST be attempted. Do NOT open this paper

More information

OPERATIONAL CASE STUDY PRACTICE EXAM ANSWERS

OPERATIONAL CASE STUDY PRACTICE EXAM ANSWERS OPERATIONAL CASE STUDY PRACTICE EXAM ANSWERS The Practice Exam can be viewed at http://www.pearsonvue.com/cima/practiceexams/ These answers have been provided by CIMA for information purposes only. The

More information

Paper P2 Management Accounting Decision Management

Paper P2 Management Accounting Decision Management May 2007 Examinations Managerial Level Paper P2 Management Accounting Decision Management Question Paper 2 Examiner s Brief Guide to the Paper 20 Examiner s Answers 21 The answers published here have been

More information

1 (a) Calculation of net present value (NPV) Year 1 2 3 4 5 6 $000 $000 $000 $000 $000 $000 Sales revenue 1,600 1,600 1,600 1,600 1,600

1 (a) Calculation of net present value (NPV) Year 1 2 3 4 5 6 $000 $000 $000 $000 $000 $000 Sales revenue 1,600 1,600 1,600 1,600 1,600 Answers Fundamentals Level Skills Module, Paper F9 Financial Management December 2011 Answers 1 (a) Calculation of net present value (NPV) Year 1 2 3 4 5 6 $000 $000 $000 $000 $000 $000 Sales revenue 1,600

More information

Paper 7 Management Accounting

Paper 7 Management Accounting Technician Level Paper 7 Management Accounting Extended Syllabus INTRODUCTION Extended Syllabuses are part of a comprehensive package of support materials offered by SIAT. This package includes past question

More information

P2 Performance Management September 2014 examination

P2 Performance Management September 2014 examination Management Level Paper P2 Performance Management September 2014 examination Examiner s Answers Note: Some of the answers that follow are fuller and more comprehensive than would be expected from a well-prepared

More information

C A R I B B E A N E X A M I N A T I O N S C O U N C I L REPORT ON CANDIDATES WORK IN THE SECONDARY EDUCATION CERTIFICATE EXAMINATION MAY/JUNE 2011

C A R I B B E A N E X A M I N A T I O N S C O U N C I L REPORT ON CANDIDATES WORK IN THE SECONDARY EDUCATION CERTIFICATE EXAMINATION MAY/JUNE 2011 C A R I B B E A N E X A M I N A T I O N S C O U N C I L REPORT ON CANDIDATES WORK IN THE SECONDARY EDUCATION CERTIFICATE EXAMINATION MAY/JUNE 2011 ECONOMICS GENERAL PROFICIENCY EXAMINATION Copyright 2011

More information

Examiner s report FA2 Maintaining Financial Records For CBE and Paper exams covering January to June 2013

Examiner s report FA2 Maintaining Financial Records For CBE and Paper exams covering January to June 2013 Examiner s report FA2 Maintaining Financial Records For CBE and Paper exams covering January to June 2013 General Comments The purpose of writing an examiners report is to draw the attention of candidates

More information

10.SHORT-TERM DECISIONS & CAPITAL INVESTMENT APPRAISAL

10.SHORT-TERM DECISIONS & CAPITAL INVESTMENT APPRAISAL INDUSTRIAL UNIVERSITY OF HO CHI MINH CITY AUDITING ACCOUNTING FACULTY 10.SHORT-TERM DECISIONS & CAPITAL INVESTMENT APPRAISAL 4 Topic List INDUSTRIAL UNIVERSITY OF HO CHI MINH CITY AUDITING ACCOUNTING FACULTY

More information

Institute of Chartered Accountants Ghana (ICAG) Paper 2.2 Management Accounting

Institute of Chartered Accountants Ghana (ICAG) Paper 2.2 Management Accounting Institute of Chartered Accountants Ghana (ICAG) Paper. Management Accounting Final Mock Exam Marking scheme and suggested solutions DO NOT TURN THIS PAGE UNTIL YOU HAVE COMPLETED THE MOCK EXAM ii Management

More information

1. What are the three types of business organizations? Define them

1. What are the three types of business organizations? Define them Written Exam Ticket 1 1. What is Finance? What do financial managers try to maximize, and what is their second objective? 2. How do you compare cash flows at different points in time? 3. Write the formulas

More information

Further comments are provided under Examiner s Comments for individual questions.

Further comments are provided under Examiner s Comments for individual questions. F3 FINANCIAL STRATEGY Examiner s general comments This was the first diet under the 2010 syllabus for F3, which replaces P9 under the old syllabus. The syllabus content is largely unchanged but a revised

More information

Management Accounting 2 nd Year Examination

Management Accounting 2 nd Year Examination Management Accounting 2 nd Year Examination August 2010 Paper, Solutions & Examiner s Report NOTES TO USERS ABOUT THESE SOLUTIONS The solutions in this document are published by Accounting Technicians

More information

ADVANCED INVESTMENT APPRAISAL

ADVANCED INVESTMENT APPRAISAL RELEVANT TO ACCA QUALIFICATION PAPER F9 Studying Paper F9? Performance objectives 15 and 16 are relevant to this exam Investment appraisal is one of the eight core topics within Paper F9, Financial Management

More information

Paper F9. Financial Management. Friday 6 June 2014. Fundamentals Level Skills Module. The Association of Chartered Certified Accountants.

Paper F9. Financial Management. Friday 6 June 2014. Fundamentals Level Skills Module. The Association of Chartered Certified Accountants. Fundamentals Level Skills Module Financial Management Friday 6 June 2014 Time allowed Reading and planning: Writing: 15 minutes 3 hours ALL FOUR questions are compulsory and MUST be attempted. Formulae

More information

Performance Management (F5) December 2014 to June 2015

Performance Management (F5) December 2014 to June 2015 Performance Management (F5) December 2014 to June 2015 This syllabus and study guide is designed to help This syllabus and study guide is designed to help with planning study and to provide detailed information

More information

Paper F9. Financial Management. Friday 6 December 2013. Fundamentals Level Skills Module. The Association of Chartered Certified Accountants

Paper F9. Financial Management. Friday 6 December 2013. Fundamentals Level Skills Module. The Association of Chartered Certified Accountants Fundamentals Level Skills Module Financial Management Friday 6 December 2013 Time allowed Reading and planning: Writing: 15 minutes 3 hours ALL FOUR questions are compulsory and MUST be attempted. Formulae

More information

Examiner s report F8 Audit & Assurance December 2014

Examiner s report F8 Audit & Assurance December 2014 Examiner s report F8 Audit & Assurance December 2014 General Comments The examination consisted of twelve objective test questions in Section A, worth 20 marks and six questions in Section B worth 80 marks.

More information

Management Accounting Financial Strategy

Management Accounting Financial Strategy PAPER P9 Management Accounting Financial Strategy The Examiner provides a short study guide, for all candidates revising for this paper, to some first principles of finance and financial management Based

More information

UNIVERSITY OF BOLTON BUSINESS SCHOOL ACCOUNTANCY SEMESTER 1 EXAMINATION 2015/2016 MANAGEMENT ACCOUNTING AND DECISION MAKING MODULE NO: ACC5002

UNIVERSITY OF BOLTON BUSINESS SCHOOL ACCOUNTANCY SEMESTER 1 EXAMINATION 2015/2016 MANAGEMENT ACCOUNTING AND DECISION MAKING MODULE NO: ACC5002 BBS009 UNIVERSITY OF BOLTON BUSINESS SCHOOL ACCOUNTANCY SEMESTER 1 EXAMINATION 2015/2016 MANAGEMENT ACCOUNTING AND DECISION MAKING MODULE NO: ACC5002 Date: Tuesday 12 th January 2016 Time: 2:00pm to 5:00pm

More information

WJEC Applied Business A level. ABUS 1 and ABUS 5

WJEC Applied Business A level. ABUS 1 and ABUS 5 1 WJEC Applied Business A level ABUS 1 and ABUS 5 Additional information: formulae, layout and terminology ABUS 1 and ABUS 5 Accounting terminology A number of the terms used in Accounting are changing,

More information

Financial record keeping

Financial record keeping Financial record keeping 01 Introduction All businesses and many other types of organization will need to keep records of any financial transactions that take place. However, it makes sense to introduce

More information

Financial Accounting 1 st Year Examination

Financial Accounting 1 st Year Examination Financial Accounting 1 st Year Examination May 2012 Paper, Solutions & Examiner s Report NOTES TO USERS ABOUT THESE SOLUTIONS The solutions in this document are published by Accounting Technicians Ireland.

More information

Management Accounting (F2/FMA) September 2015 (for CBE exams from 23 September 2015) to August 2016

Management Accounting (F2/FMA) September 2015 (for CBE exams from 23 September 2015) to August 2016 Management Accounting (F2/FMA) September 2015 (for CBE exams from 23 September 2015) to August 2016 This syllabus and study guide are designed to help with teaching and learning and is intended to provide

More information

COST AND MANAGEMENT ACCOUNTING

COST AND MANAGEMENT ACCOUNTING EXECUTIVE PROGRAMME COST AND MANAGEMENT ACCOUNTING SAMPLE TEST PAPER (This test paper is for practice and self study only and not to be sent to the institute) Time allowed: 3 hours Maximum marks : 100

More information

ICASL - Business School Programme

ICASL - Business School Programme ICASL - Business School Programme Quantitative Techniques for Business (Module 3) Financial Mathematics TUTORIAL 2A This chapter deals with problems related to investing money or capital in a business

More information

Net Present Value and Capital Budgeting. What to Discount

Net Present Value and Capital Budgeting. What to Discount Net Present Value and Capital Budgeting (Text reference: Chapter 7) Topics what to discount the CCA system total project cash flow vs. tax shield approach detailed CCA calculations and examples project

More information

Preparing cash budgets

Preparing cash budgets 3 Preparing cash budgets this chapter covers... In this chapter we will examine in detail how a cash budget is prepared. This is an important part of your studies, and you will need to be able to prepare

More information

Examiner s report F7 Performance Management June 2016

Examiner s report F7 Performance Management June 2016 Examiner s report F7 Performance Management June 2016 General Comments The June 2016 paper represented the final paper in the current format. There were two sections; Section A consisted of 20, 2-mark

More information

BF 6701 : Financial Management Comprehensive Examination Guideline

BF 6701 : Financial Management Comprehensive Examination Guideline BF 6701 : Financial Management Comprehensive Examination Guideline 1) There will be 5 essay questions and 5 calculation questions to be completed in 1-hour exam. 2) The topics included in those essay and

More information

The budgeting process

The budgeting process The budgeting process Question IM 15.1 Intermediate Question IM 15.2 Intermediate Question IM 15.3 Question IM 15.4 Question IM 15.5 Outline: (a) the objectives of budgetary planning and control systems;

More information

Management Accounting

Management Accounting Management Accounting 2 nd Year Examination May 2014 Exam Paper, Solutions & Examiner s Comments NOTES TO USERS ABOUT THESE SOLUTIONS The solutions in this document are published by Accounting Technicians

More information

MANAGEMENT ACCOUNTING

MANAGEMENT ACCOUNTING MANAGEMENT ACCOUNTING 2 nd Year Examination August 2014 Exam Paper, Solutions & Examiner s Comments 1 NOTES TO USERS ABOUT THESE SOLUTIONS The solutions in this document are published by Accounting Technicians

More information

Fundamentals Level Skills Module, Paper F5

Fundamentals Level Skills Module, Paper F5 Answers Fundamentals Level Skills Module, Paper F5 Performance Management June 2014 Answers 1 (a) Full budgeted production cost per unit using absorption costing Product X Y Z Total Budgeted annual production

More information

C01-Fundamentals of management accounting

C01-Fundamentals of management accounting Sample Exam Paper Question 1 Which of the following words DOES NOT describe a main focus of management accounting? A. Planning B. Control C. External D. Decision-making Question 2 CIMA defines management

More information

Introduction to Discounted Cash Flow and Project Appraisal. Charles Ward

Introduction to Discounted Cash Flow and Project Appraisal. Charles Ward Introduction to Discounted Cash Flow and Project Appraisal Charles Ward Company investment decisions How firms makes investment decisions about real projects (not necessarily property) How to decide which

More information

Performance Management (F5) September 2015 to June 2016

Performance Management (F5) September 2015 to June 2016 Performance Management (F5) September 2015 to June 2016 This syllabus and study guide is designed to help with planning study and to provide detailed information on what could be assessed in any examination

More information

MANAGEMENT ACCOUNTING

MANAGEMENT ACCOUNTING MANAGEMENT ACCOUNTING FORMATION 2 EXAMINATION - AUGUST 2007 NOTES Answer Questions 1 and 2 and three out of Questions 3, 4, 5 and 6. TIME ALLOWED: 3 hours, plus 10 minutes to read the paper. INSTRUCTIONS:

More information

Management and Cast Accaunting

Management and Cast Accaunting COLIN DRURY Management and Cast Accaunting Second edition CHAPMAN AND HALL University and Professional Division LONDON. NEW YORK. TOKYO. MELBOURNE. MADRAS Contents Preface XVI Part I: Introduction to Management

More information

P2 Performance Management November 2014 examination

P2 Performance Management November 2014 examination Management Level Paper P2 Performance Management November 2014 examination Examiner s Answers Note: Some of the answers that follow are fuller and more comprehensive than would be expected from a well-prepared

More information

Performance Management (F5) September 2016 to June 2017

Performance Management (F5) September 2016 to June 2017 Performance Management (F5) September 2016 to June 2017 This syllabus and study guide is designed to help with planning study and to provide detailed information on what could be assessed in any examination

More information

Fundamentals Level Skills Module, Paper F9

Fundamentals Level Skills Module, Paper F9 Answers Fundamentals Level Skills Module, Paper F9 Financial Management June 2008 Answers 1 (a) Calculation of weighted average cost of capital (WACC) Cost of equity Cost of equity using capital asset

More information

Management Accounting (F2/FMA) February 2013 to January 2014

Management Accounting (F2/FMA) February 2013 to January 2014 Management Accounting (F2/FMA) February 2013 to January 2014 This syllabus and study guide is designed to help with teaching and learning and is intended to provide detailed information on what could be

More information

MBA Data Analysis Pad John Beasley

MBA Data Analysis Pad John Beasley 1 Marketing Analysis Pad - 1985 Critical Issue: Identify / Define the Problem: Objectives: (Profitability Sales Growth Market Share Risk Diversification Innovation) Company Mission: (Source & Focus for

More information

P2 Performance Management

P2 Performance Management Pillar P P2 Performance Management Instructions to candidates Specimen Examination Paper You are allowed three hours to answer this question paper. You are allowed 20 minutes reading time before the examination

More information

(AA12) QUANTITATIVE METHODS FOR BUSINESS

(AA12) QUANTITATIVE METHODS FOR BUSINESS All Rights Reserved ASSCIATIN F ACCUNTING TECHNICIANS F SRI LANKA AA EXAMINATIN - JULY 20 (AA2) QUANTITATIVE METHDS FR BUSINESS Instructions to candidates (Please Read Carefully): () Time: 02 hours. (2)

More information

Final Examination, BUS312, D1+ E1. SFU Student number:

Final Examination, BUS312, D1+ E1. SFU Student number: Final Examination, BUS312, D1+ E1 NAME: SFU Student number: Instructions: For qualitative questions, point form is not an acceptable answer. For quantitative questions, an indication of how you arrived

More information

MODULE: PRINCIPLES OF FINANCE

MODULE: PRINCIPLES OF FINANCE Programme: BSc (Hons) Financial Services with Law BSc (Hons) Accounting with Finance BSc (Hons) Banking and International Finance BSc (Hons) Management Cohort: BFSL/13/FT Aug BACF/13/PT Aug BACF/13/FT

More information

Paper F9. Financial Management. Specimen Exam applicable from December 2014. Fundamentals Level Skills Module

Paper F9. Financial Management. Specimen Exam applicable from December 2014. Fundamentals Level Skills Module Fundamentals Level Skills Module Financial Management Specimen Exam applicable from December 2014 Time allowed Reading and planning: 15 minutes Writing: 3 hours This paper is divided into two sections:

More information

6 Investment Decisions

6 Investment Decisions 6 Investment Decisions After studying this chapter you will be able to: Learning Objectives Define capital budgeting and explain the purpose and process of Capital Budgeting for any business. Explain the

More information

Paper F5. Performance Management. Monday 3 June 2013. Fundamentals Level Skills Module. The Association of Chartered Certified Accountants

Paper F5. Performance Management. Monday 3 June 2013. Fundamentals Level Skills Module. The Association of Chartered Certified Accountants Fundamentals Level Skills Module Performance Management Monday 3 June 2013 Time allowed Reading and planning: Writing: 15 minutes 3 hours ALL FIVE questions are compulsory and MUST be attempted. Formulae

More information

Finance 445 Practice Exam Chapters 1, 2, 5, and part of Chapter 6. Part One. Multiple Choice Questions.

Finance 445 Practice Exam Chapters 1, 2, 5, and part of Chapter 6. Part One. Multiple Choice Questions. Finance 445 Practice Exam Chapters 1, 2, 5, and part of Chapter 6 Part One. Multiple Choice Questions. 1. Similar to the example given in class, assume that a corporation has $500 of cash revenue and $300

More information

MARK SCHEME for the October/November 2008 question paper 9706 ACCOUNTING

MARK SCHEME for the October/November 2008 question paper 9706 ACCOUNTING www.xtremepapers.com UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS GCE Advanced Subsidiary Level and GCE Advanced Level MARK SCHEME for the October/November 2008 question paper 9706 ACCOUNTING 9706/04

More information

Fundamentals Level Skills Module, Paper F9. Section A. Monetary value of return = $3 10 x 1 197 = $3 71 Current share price = $3 71 $0 21 = $3 50

Fundamentals Level Skills Module, Paper F9. Section A. Monetary value of return = $3 10 x 1 197 = $3 71 Current share price = $3 71 $0 21 = $3 50 Answers Fundamentals Level Skills Module, Paper F9 Financial Management December 2014 Answers Section A 1 A Monetary value of return = $3 10 x 1 197 = $3 71 Current share price = $3 71 $0 21 = $3 50 2

More information

Why Use Net Present Value? The Payback Period Method The Discounted Payback Period Method The Average Accounting Return Method The Internal Rate of

Why Use Net Present Value? The Payback Period Method The Discounted Payback Period Method The Average Accounting Return Method The Internal Rate of 1 Why Use Net Present Value? The Payback Period Method The Discounted Payback Period Method The Average Accounting Return Method The Internal Rate of Return Problems with the IRR Approach The Profitability

More information

Multiple Choice Questions (45%)

Multiple Choice Questions (45%) Multiple Choice Questions (45%) Choose the Correct Answer 1. The following information was taken from XYZ Company s accounting records for the year ended December 31, 2014: Increase in raw materials inventory

More information

MBA 8130 FOUNDATIONS OF CORPORATION FINANCE FINAL EXAM VERSION A

MBA 8130 FOUNDATIONS OF CORPORATION FINANCE FINAL EXAM VERSION A MBA 8130 FOUNDATIONS OF CORPORATION FINANCE FINAL EXAM VERSION A Fall Semester 2004 Name: Class: Day/Time/Instructor:. Read the following directions very carefully. Failure to follow these directions will

More information

Paper F2. Management Accounting. Pilot Paper from December 2011 onwards. Fundamentals Pilot Paper Knowledge Module

Paper F2. Management Accounting. Pilot Paper from December 2011 onwards. Fundamentals Pilot Paper Knowledge Module Fundamentals Pilot Paper Knowledge Module Management ccounting Pilot Paper from ecember 2011 onwards Time allowed: 2 hours LL 50 questions are compulsory and MUST be attempted. Formulae Sheet, Present

More information

Income statements. Introduction. Calculating profit

Income statements. Introduction. Calculating profit Income statements 02 Introduction Generating as much profit as possible (known as profit maximization) is often seen as the main objective for many businesses. It is possible that a business has other

More information

Examiner s report F9 Financial Management June 2013

Examiner s report F9 Financial Management June 2013 Examiner s report F9 Financial Management June 2013 General Comments The examination consisted of four compulsory questions, each worth 25 marks. Most candidates attempted all four questions and there

More information

A target cost is arrived at by identifying the market price of a product and then subtracting a desired profit margin from it.

A target cost is arrived at by identifying the market price of a product and then subtracting a desired profit margin from it. Answers Fundamentals Level Skills Module, Paper F5 Performance Management June 2015 Answers Section A 1 C Divisional profit before depreciation = $2 7m x 15% = $405,000 per annum. Less depreciation = $2

More information

Paper F2. Management Accounting. Specimen Exam applicable from June 2014. Fundamentals Level Knowledge Module

Paper F2. Management Accounting. Specimen Exam applicable from June 2014. Fundamentals Level Knowledge Module Fundamentals Level Knowledge Module Management ccounting Specimen Exam applicable from June 2014 Time allowed: 2 hours This paper is divided into two sections: Section LL 35 questions are compulsory and

More information

Financial Pillar. F2 Financial Management. 20 November 2014 Thursday Afternoon Session

Financial Pillar. F2 Financial Management. 20 November 2014 Thursday Afternoon Session DO NOT OPEN THIS QUESTION PAPER UNTIL YOU ARE TOLD TO DO SO. Financial Pillar F2 Financial Management 20 November 2014 Thursday Afternoon Session Instructions to candidates You are allowed three hours

More information

Financial Management (F9) September 2015 to June 2016

Financial Management (F9) September 2015 to June 2016 Financial Management (F9) September 2015 to June 2016 This syllabus and study guide are designed to help with planning study and to provide detailed information on what could be assessed in any examination

More information

Investment Appraisal

Investment Appraisal W J E C B U S I N E S S S T U D I E S A L E V E L R E S O U R C E S. Investment Appraisal 2008 Spec. Issue 2 Sept. 2012 Page 1 Specification requirement Payback, average rate of return (ARR) and discounted

More information

CASH BUDGETS AND RELATED TOPICS

CASH BUDGETS AND RELATED TOPICS CASH BUDGETS AND RELATED TOPICS Article relevant to Formation 2 Management Accounting Author: Neil Hayden, current Examiner. In projected cash flow statements the information can be presented in a variety

More information

Guide to cash flow management

Guide to cash flow management Guide to cash flow management Cash flow management What is cash flow management? For a business to be successful, good cash flow management is crucial. Cash flow is the primary indicator of a business

More information

Calculating profitability indicators - profitability

Calculating profitability indicators - profitability Calculating profitability indicators - profitability Introduction When a business is deciding whether to grant credit to a potential customer, or whether to continue to grant credit terms to an existing

More information

How a Hotel Valuation is Undertaken and What a Bank Really Needs from a Valuation

How a Hotel Valuation is Undertaken and What a Bank Really Needs from a Valuation Hotel Valuation How a Hotel Valuation is Undertaken and What a Bank Really Needs from a Valuation This summary paper outlines what is involved in a hotel valuation, and how it can be useful, as well as

More information

ACCA Certified Accounting Technician Examination Paper T7. Section A. 2 C ($200,000 ($200,000 0 2 x 0 15)) = $50,000

ACCA Certified Accounting Technician Examination Paper T7. Section A. 2 C ($200,000 ($200,000 0 2 x 0 15)) = $50,000 Answers ACCA Certified Accounting Technician Examination Paper T7 Planning, Control and Financial Management December 2009 Answers Section A 1 A 2 C ($200,000 ($200,000 0 2 x 0 15)) = $50,000 3 D 4 B $3,600

More information

Short Term Finance and Planning. Sources and Uses of Cash

Short Term Finance and Planning. Sources and Uses of Cash Short Term Finance and Planning (Text reference: Chapter 27) Topics sources and uses of cash operating cycle and cash cycle short term financial policy cash budgeting short term financial planning AFM

More information

Chapter 9. Year Revenue COGS Depreciation S&A Taxable Income After-tax Operating Income 1 $20.60 $12.36 $1.00 $2.06 $5.18 $3.11

Chapter 9. Year Revenue COGS Depreciation S&A Taxable Income After-tax Operating Income 1 $20.60 $12.36 $1.00 $2.06 $5.18 $3.11 Chapter 9 9-1 We assume that revenues and selling & administrative expenses will increase at the rate of inflation. Year Revenue COGS Depreciation S&A Taxable Income After-tax Operating Income 1 $20.60

More information

Course 3: Capital Budgeting Analysis

Course 3: Capital Budgeting Analysis Excellence in Financial Management Course 3: Capital Budgeting Analysis Prepared by: Matt H. Evans, CPA, CMA, CFM This course provides a concise overview of capital budgeting analysis. This course is recommended

More information

Accounting. and Finance. An Introduction. Eddie McLaney. and. Peter Atrill

Accounting. and Finance. An Introduction. Eddie McLaney. and. Peter Atrill Accounting and Finance An Introduction Eddie McLaney and Peter Atrill PEARSON Marlow, England London New York Boston San Francisco Toronto Sydney Auckland Singapore Hong Kong» Tokyo Seoul Taipei New Delhi

More information

Fundamentals Level Skills Module, Paper F9

Fundamentals Level Skills Module, Paper F9 Answers Fundamentals Level Skills Module, Paper F9 Financial Management December 2008 Answers 1 (a) Rights issue price = 2 5 x 0 8 = $2 00 per share Theoretical ex rights price = ((2 50 x 4) + (1 x 2 00)/5=$2

More information

Paper F5. Performance Management. Specimen Exam applicable from December 2014. Fundamentals Level Skills Module

Paper F5. Performance Management. Specimen Exam applicable from December 2014. Fundamentals Level Skills Module Fundamentals Level Skills Module Performance Management Specimen Exam applicable from December 2014 Time allowed Reading and planning: 15 minutes Writing: 3 hours This paper is divided into two sections:

More information

Contribution 787 1,368 1,813 983. Taxable cash flow 682 1,253 1,688 858 Tax liabilities (205) (376) (506) (257)

Contribution 787 1,368 1,813 983. Taxable cash flow 682 1,253 1,688 858 Tax liabilities (205) (376) (506) (257) Answers Fundamentals Level Skills Module, Paper F9 Financial Management June 2012 Answers 1 (a) Calculation of net present value (NPV) As nominal after-tax cash flows are to be discounted, the nominal

More information

Paper F9. Financial Management. Friday 5 December 2014. Fundamentals Level Skills Module. The Association of Chartered Certified Accountants

Paper F9. Financial Management. Friday 5 December 2014. Fundamentals Level Skills Module. The Association of Chartered Certified Accountants Fundamentals Level Skills Module Financial Management Friday 5 ecember 2014 Time allowed Reading and planning: 15 minutes Writing: 3 hours This paper is divided into two sections: Section A ALL 20 questions

More information

Advanced Financial Accounting

Advanced Financial Accounting Advanced Financial Accounting Sample Paper 2 Questions & Suggested Solutions Page 1 of 27 INSTRUCTIONS TO CANDIDATES PLEASE READ CAREFULLY Candidates must indicate clearly whether they are answering the

More information