UNIVERSITY OF BOLTON

REGENT COLLEGE LONDON

BSc(HONS) BUSINESS MANAGEMENT

SEMESTER 1, EXAMINATION 2020/2021

FINANCIAL MANAGEMENT AND DECISION

MAKING

MODULE NO: BMP5006

Exam Paper Release Date & Time: Saturday 06 August 2022 at 10:00am
Submission Cut-off Date & Time: Monday 08 August 2022 at 10:00am
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INSTRUCTIONS TO CANDIDATES: There are Five questions on this

paper.

Answer all questions.

This examination is 48 hours.

Please 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 2021-2022
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 projects 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 Net Present Value in investment appraisal.
(4 marks)

(Total 20 Marks)
 Page 3 of 8

BSc (Hons) Business

Semester 1 Examination 2021-2022
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

2019 2020

£000 £000

Non-Current assets 405 361

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 2021-2022
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 turnover
(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 20)

 Page 5 of 8

BSc (Hons) Business

Semester 1 Examination 2021-2022
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 20 marks)
 Page 6 of 8

BSc (Hons) Business

Semester 1 Examination 2021-2022
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 20)

END OF QUESTION PAPER

 Page 7 of 8

BSc (Hons) Business

Semester 1 Examination 2021-2022
Management Accountancy and Decision Making
Module No. BMP5006
Present Value Table

Present value of 1 i.e. (1 + r)-n

Where r = discount rate and n = number of periods until payment

Discount rate (r)

Period 1% 2% 3% 4% 5% 6% 7% 8% 9% 10%
s
(n)
1 0.99 0.98 0.97 0.96 0.95 0.94 0.93 0.92 0.91 0.90
0 0 1 2 2 3 5 6 7 9
2 0.98 0.96 0.94 0.92 0.90 0.89 0.87 0.85 0.84 0.82
0 1 3 5 7 0 3 7 2 6
3 0.97 0.94 0.91 0.88 0.86 0.84 0.81 0.79 0.77 0.75
1 2 5 9 4 0 6 4 2 1
4 0.96 0.92 0.88 0.85 0.82 0.79 0.76 0.73 0.70 0.68
1 4 8 5 3 2 3 5 8 3
5 0.95 0.90 0.86 0.82 0.78 0.74 0.71 0.68 0.65 0.62
1 6 3 2 4 7 3 1 0 1
6 0.94 0.88 0.83 0.79 0.74 0.70 0.66 0.63 0.59 0.56
2 8 7 0 6 5 6 0 6 4
7 0.93 0.87 0.81 0.76 0.71 0.66 0.62 0.58 0.54 0.51
3 1 3 0 1 5 3 3 7 3
8 0.92 0.85 0.78 0.73 0.67 0.62 0.58 0.54 0.50 0.46
3 3 9 1 7 7 2 0 2 7
9 0.91 0.83 0.76 0.70 0.64 0.59 0.54 0.50 0.46 0.42
4 7 6 3 5 2 4 0 0 4
10 0.90 0.82 0.74 0.67 0.61 0.55 0.50 0.46 0.42 0.38
5 0 4 6 4 8 8 3 2 6
11 0.89 0.80 0.72 0.65 0.58 0.52 0.47 0.42 0.38 0.35
6 4 2 0 5 7 5 9 8 0
12 0.88 0.78 0.70 0.62 0.55 0.49 0.44 0.39 0.35 0.31
7 8 1 5 7 7 4 7 6 9
13 0.87 0.77 0.68 0.60 0.53 0.46 0.41 0.36 0.32 0.29
9 3 1 1 0 9 5 8 6 0
14 0.87 0.75 0.66 0.57 0.50 0.44 0.38 0.34 0.29 0.26
0 8 1 7 5 2 8 0 9 3
15 0.86 0.74 0.64 0.55 0.48 0.41 0.36 0.31 0.27 0.23
1 3 2 5 1 7 2 5 5 9
 Page 8 of 8

BSc (Hons) Business

Semester 1 Examination 2021-2022
Management Accountancy and Decision Making
Module No. BMP5006
(n) 11% 12% 13% 14% 15% 16% 17% 18% 19% 20%

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