Series 4 Examination 2008

BUSINESS CALCULATIONS
Level 2 Friday 14 November Subject Code: 2003 Time allowed: 2 hours 30 minutes

INSTRUCTIONS FOR CANDIDATES Answer all 8 questions. Write your answers in blue or black ink/ballpoint. You may use pencil only for graphs, charts, diagrams, etc. All answers must be correctly numbered but need not be in numerical order. You must show all calculations, where applicable, on the answer paper provided. You can use mathematical and statistical tables. Your work should be accurate and neat. You may use a calculator provided the calculator gives no printout, has no word display facilities, is silent and cordless. The provision of batteries and their condition is your responsibility.

2003/4/08

Page 1 of 6

ASE 2003 4 08 1

Answer all questions QUESTION 1 (a) A manufacturer borrowed 50,000 at 4% per annum simple interest and paid a total of 15,750 in interest charges. (i) (ii) Calculate the number of years for which the 50,000 was borrowed. (3 marks) Calculate the additional interest if the manufacturer borrows the 50,000 for a further six-month period. (3 marks) (b) Calculate the interest if the manufacturer borrows 50,000 at 4% compound interest for 3 years. (4 marks) (Total 10 marks) QUESTION 2 (a) A retailers total sales in a year were 475,000. The cost price of goods sold was 290,000. During the year the following overheads were paid: Wages Heat, light, telephone Rent of premises Office expenses Calculate: (i) (ii) total overheads, including wages, in euros the net profit, in euros (2 marks) (3 marks) (2 marks) (2 marks) 45,000 7,225 32,000 22,400

(iii) the net profit as a percentage of total sales (iv) the net profit in pounds sterling, given a rate of exchange of 1 to 1.5675.

(b) Company A issues shares at 6.20 and raises 2,170,000. Martha buys 700 of the shares. What percentage of the share issue does Martha buy? (3 marks) (c) Martha later sells her shares for 4,459. Calculate the selling price per share. (2 marks) (Total 14 marks)

2003/4/08

Page 2 of 6

QUESTION 3 (a) A sales person earns 2,100 in June, plus basic commission of 1.5% on sales of 25,000, plus bonus commission of 2.5% on further sales of 6,560. Calculate the sales persons gross income, including commission, in June. (3 marks) (b) At head office, in the Netherlands, the sales persons manager has a gross salary of 43,500 per annum. In June, the manager received a bonus of 4% of her monthly gross salary The gross income in June of the sales person and the manager were exactly the same. Calculate the rate of exchange in pounds sterling per euro. (4 marks) (c) In July, the sales person earned a total of 2,600 gross income. Deductions from salary in July are Income Tax and National Insurance. National Insurance deduction in July is 6% of gross income. Income Tax deduction in July is 440. Calculate the sales persons salary for July, net of deductions. (3 marks) (d) In a particular week another employee earned 7.80 per hour for a basic 38 hour week, plus a higher rate per hour for 5 hours overtime. The total earned was 352.40. Calculate the overtime rate per hour. (4 marks) (Total 14 marks)

2003/4/08

Page 3 of 6

QUESTION 4 Jean-Paul writes out an invoice for the following items: 150 gaskets type A at 0.39 each 250 gaskets type B at 0.48 each 500 gaskets type C at 0.57 each (a) Show that the total cost of the order is 463.50. Show your working clearly. (3 marks) The gaskets are supplied in packs of 50. (b) Calculate the average cost per pack of the gaskets purchased. (4 marks) A trade discount of 10% is allowed, and deducted on the invoice. (c) Calculate the total of the invoice. (2 marks) The customer is given a discount for paying within one month. The customer pays 406.72. (d) Calculate the percentage rate of discount for paying within one month. (3 marks) The amount paid by the customer is to be converted into U.S. dollars for the company accounts at an exchange rate of $1 = 0.6355. (e) Calculate the amount paid by the customer in U.S. dollars. (2 marks) The customer completes her accounts in Britain, and enters the purchase as 254.20. (f) Calculate the exchange rate used by the customer in euros per pound sterling. (2 marks) (Total 16 marks)

2003/4/08

Page 4 of 6

QUESTION 5 A retailers premises are valued at 320,000 with contents valued at 250,000. Annual insurance premium rates are as follows: Buildings Contents 9.95 per 10,000 insured 1.85 per 1,000 insured (4 marks) Simone is quoted a price of 702 to insure her car. The price includes a no claims discount of 35%. (b) Calculate the price before applying the no claims discount. (2 marks) Reubens car is insured for only 85% of its real value, at a cost of 476. (c) Calculate: (i) (ii) The compensation paid for accident repairs costing 520. (2 marks) The cost of insuring the car for its full value. (2 marks) (Total 10 marks) QUESTION 6 Lee wants to buy a 16,500 car on hire purchase. Companies X and Y offer the following terms: Company X: Company Y: 2,450 deposit, plus 12 monthly payments of 1,925 each. 1,800 deposit, plus 12 monthly payments of 1,400 each.

(a) Calculate the total annual premium paid by the retailer.

(a) Using a conversion of 1.40 = 1, compare: (i) (ii) the deposits (2 marks) the monthly payments (2 marks) (iii) the total cost of purchase (3 marks) (iv) advise Lee on which company is cheaper. (1 mark) Company Z offers the following terms: 11% deposit, plus 17,100 paid in equal monthly instalments over one and a half years. (b) Calculate the deposit, monthly payment and total cost of purchase with Company Z. (5 marks) (c) Give a reason why Thomas might choose Company Z. (1 mark) (Total 14 marks)

2003/4/08

Page 5 of 6

QUESTION 7 A small trader has four computers costing 500, 600, 760 and 800. (a) Calculate the average cost per computer. (3 marks) The trader sells the 800 computer and buys 3 more computers at 500 each. (b) Calculate: (i) (ii) The total cost of the 6 computers now owned by the trader. (2 marks) The new average cost per computer. (2 marks) The trader sells 3 computers for 2,050, and issues a statement of account. The statement offers a discount of 2% for payment within 28 days. (c) How much will the trader receive if payment is made within 28 days? (3 marks) (Total 10 marks)

QUESTION 8 Geraldine and Henry set up a partnership business on 1 January with invested capitals of 105,000 and 90,000 respectively. On 1 July they shared profits of 39,000 in proportion to their capital invested. (a) Calculate how much Geraldine received as her share of profits for the first 6 months of trading. (3 marks) At the start of the second year of trading, Ian invested $150,000 in the partnership at an exchange rate of 0.48 = $1. (b) Giving your answer in its simplest terms, calculate the ratio of investments of the three partners, Geraldine : Henry : Ian, in the second year of trading. (3 marks) At the end of the second year of trading, Henry received 10,800 as his share of the profits. Geraldine also received a salary of 1,650 per month for 7 months. (c) Calculate how much, in total, Geraldine received in salary and profits for the second year of trading. (3 marks) During the third year of trading, the total capital invested was 360,000 in the ratio Geraldine : Henry : Ian = 6 : 5 : 4. Each partner received interest on capital of 2%. (d) Calculate how much Ian received in interest on capital. (3 marks) (Total 12 marks) (Total 100 marks)

2003/4/08

Page 6 of 6

Education Development International plc 2008