天津财经大学 最新ACCA注册会计师考试 f5_ 最低第8_dec_q

P a p e r F 5

ALL FOUR questions are compulsory and MUST be attempted

1Pace Company (PC) runs a large number of wholesale stores and is increasing the number of these stores all the time.

It measures the performance of each store on the basis of a target return on investment (ROI) of 15%. Store managers get a bonus of 10% of their salary if their store’s annual ROI exceeds the target each year. Once a store is built there is very little further capital expenditure until a full four years have passed.

PC has a store (store W) in the west of the country. Store W has historic financial data as follows over the past four years:

2005200620072008

Sales ($’000)200200180170

Gross profit ($’000)80706351

Net profit ($’000)1314108

Net assets at start of year ($’000)100806040

The market in which PC operates has been growing steadily. Typically, PC’s stores generate a 40% gross profit margin.

Required:

(a)Discuss the past financial performance of store W using ROI and any other measure you feel appropriate

and, using your findings, discuss whether the ROI correctly reflects Store W’s actual performance.

(8 marks)

(b)Explain how a manager in store W might have been able to manipulate the results so as to gain bonuses

more frequently.(4 marks) PC has another store (store S) about to open in the south of the country. It has asked you for help in calculating the gross profit, net profit and ROI it can expect over each of the next four years. The following information is provided: Sales volume in the first year will be 18,000 units. Sales volume will grow at the rate of 10% for years two and three but no further growth is expected in year 4. Sales price will start at $12 per unit for the first two years but then reduce by 5% per annum for each of the next two years.

Gross profit will start at 40% but will reduce as the sales price reduces. All purchase prices on goods for resale will remain constant for the four years.

Overheads, including depreciation, will be $70,000 for the first two years rising to $80,000 in years three and four.

Store S requires an investment of $100,000 at the start of its first year of trading.

PC depreciates non-current assets at the rate of 25% of cost. No residual value is expected on these assets.

Required:

(c)Calculate (in columnar form) the revenue, gross profit, net profit and ROI of store S over each of its first four

years.(9 marks)

(d)Calculate the minimum sales volume required in year 4 (assuming all other variables remain unchanged) to

earn the manager of S a bonus in that year.(4 marks)

(25 marks)

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2Shifters Haulage (SH) is considering changing some of the vans it uses to transport crates for customers. The new vans come in three sizes; small, medium and large. SH is unsure about which type to buy. The capacity is 100 crates for the small van, 150 for the medium van and 200 for the large van.

Demand for crates varies and can be either 120 or 190 crates per period, with the probability of the higher demand figure being 0·6.

The sale price per crate is $10 and the variable cost $4 per crate for all van sizes subject to the fact that if the capacity of the van is greater than the demand for crates in a period then the variable cost will be lower by 10% to allow for the fact that the vans will be partly empty when transporting crates.

SH is concerned that if the demand for crates exceeds the capacity of the vans then customers will have to be turned away. SH estimates that in this case goodwill of $100 would be charged against profits per period to allow for lost future sales regardless of the number of customers that are turned away.

Depreciation charged would be $200 per period for the small, $300 for the medium and $400 for the large van.

SH has in the past been very aggressive in its decision-making, pressing ahead with rapid growth strategies. However, its managers have recently grown more cautious as the business has become more competitive.

Required:

(a)Explain the principles behind the maximax, maximin and expected value criteria that are sometimes used to

make decisions in uncertain situations.(4 marks)

(b)Prepare a profits table showing the SIX possible profit figures per period.(9 marks)

(c)Using your profit table from (b) above discuss which type of van SH should buy taking into consideration the

possible risk attitudes of the managers.(6 marks)

(d)Describe THREE methods other than those mentioned in (a) above, which businesses can use to analyse and

assess the risk that exists in its decision-making.(6 marks)

(25 marks)

3[P.T.O.

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4Wargrin designs, develops and sells many PC games. Games have a short lifecycle lasting around three years only.

Performance of the games is measured by reference to the profits made in each of the expected three years of popularity. Wargrin accepts a net profit of 35% of turnover as reasonable. A rate of contribution (sales price less variable cost) of 75% is also considered acceptable.

Wargrin has a large centralised development department which carries out all the design work before it passes the completed game to the sales and distribution department to market and distribute the product.

Wargrin has developed a brand new game called Stealth and this has the following budgeted performance figures.

The selling price of Stealth will be a constant $30 per game. Analysis of the costs show that at a volume of 10,000 units a total cost of $130,000 is expected. However at a volume of 14,000 units a total cost of $150,000 is expected. If volumes exceed 15,000 units the fixed costs will increase by 50%.

Stealth’s budgeted volumes are as follows:

Year1Year2Year3

Sales volume8,000 units16,000 units4,000 units

In addition, marketing costs for Stealth will be $60,000 in year one and $40,000 in year two. Design and development costs are all incurred before the game is launched and has cost $300,000 for Stealth. These costs are written off to the income statement as incurred (i.e. before year 1 above).

Required:

(a)Explain the principles behind lifecycle costing and briefly state why Wargrin in particular should consider

these lifecycle principles.(4 marks)

(b)Produce the budgeted results for the game ‘Stealth’ and briefly assess the game’s expected performance,

taking into account the whole lifecycle of the game.(9 marks)

(c)Explain why incremental budgeting is a common method of budgeting and outline the main problems with

such an approach.(6 marks)

(d)Discuss the extent to which a meaningful standard cost can be set for games produced by Wargrin. You

should consider each of the cost classifications mentioned above.(6 marks)

(25 marks)

5[P.T.O.

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