Marys Medicine

Certified Accounting Technician Examination Managing Finances Wednesday 10 June 2009 Time allowed
Reading and planning:
This paper is divided into two sections: Section A – ALL TEN questions are compulsory and MUST Section B – ALL FOUR questions are compulsory and MUST Do NOT open this paper until instructed by the supervisor.
During reading and planning time only the question paper may
be annotated. You must NOT write in your answer booklet until
instructed by the supervisor.

This question paper must not be removed from the examination hall.
The Association of Chartered Certified Accountants
This is a blank page.
The question paper begins on page 3.
Section A – ALL TEN questions are compulsory and MUST be attempted
Please use the Candidate Registration Sheet provided to indicate your chosen answer to each multiple choice question.
Each question in this section is worth 2 marks.
Chelm Co makes and sells one product, X. It uses marginal costing for all internal reporting. Details relating to theproduction of one unit of X are: Direct material cost Variable overhead Fixed overheads amount to $40,000 for the period under consideration. Budgeted sales for the period are 5,000units.
What is the contribution per unit of X?
Boom Co sells one product, Y, for $12 per unit. Material cost is $2·20 per unit, labour costs are $1·40 per unit andvariable overheads are $0·80 per unit. The company incurs fixed costs of $540,000 per annum. Calculate how many units of Y, to the nearest whole unit, must be sold in order to break-even.
Lane Co has budgeted sales of 226,000 units per annum. Its fixed costs are $440,000 per annum. It sells oneproduct at a selling price of $8·80 per unit. This product has a contribution of $2·20 per unit. Calculate the margin of safety for Lane Co, to the nearest whole unit.
An increase in the period of credit given by suppliers A decrease in the period of credit given by suppliers An increase in the period of credit given to customers A decrease in the period of credit given to customers Which of the above will increase the length of the cash operating cycle?
The following statements have been made about the probable long-term effects of introducing a just-in-time systemof inventory management: Inventory holding costs increase (ii) Labour productivity improves(iii) Manufacturing lead times decrease Which of the above statements is true?
(i), (ii) and (iii) (i) and (ii) only (i) and (iii) only (ii) and (iii) only The following statements have been made about a bank's rights in relation to its customers: The bank has the right to be repaid overdrawn balances on demand, except where the overdraft terms require aperiod of notice.
(ii) The bank can use the customers' money in any legally or morally acceptable way that it chooses.
(iii) A customer's money must always be available for immediate withdrawal, irrespective of the terms of the deposit.
Which of the above statements is true?
(i) and (ii) only (i), (ii) and (iii) (i) and (iii) only (ii) and (iii) only The net present value of a proposed project is a positive $56,000 at a discount rate of 10% and a negative $28,000at 20%. What is the internal rate of return of the project, to the nearest whole percentage?
The following data relates to a manufacturing company: Average finished goods inventory Average raw materials inventory Sales for the period Gross profit margin WIP is 50% complete as regards materials and conversion costs.
What is the average production period (work-in-progress) to the nearest whole day?
The following statements have been made about the essential elements of a contract: All contracts need to be in a strict legal form in order to be binding (ii) Both parties must have intended the contract to be legally binding(iii) Offer and acceptance must both have taken place Which of the above statements are true?
(i), (ii) and (iii) (i) and (iii) only (ii) and (iii) only (i) and (ii) only 10 Which of the following is a potential remedy when one party has breached a contract?
Specific performance (ii) Termination(iii) Quantum merit(iv) Damages (i) and (iv) only (i), (ii) and (iv) only (20 marks)
Section B – ALL FOUR questions are compulsory and MUST be attempted
Painless Co is a pharmaceutical company making both ibuprofen based and paracetamol based pain relief tablets. Itis considering outsourcing its whole packaging operation. The following information is available: A total of 170 staff would be made redundant immediately. All staff are currently graded from A to D, with grade A staff being the lowest paid. Details of the staff to be made redundant are shown below: No. of redundancies Salary per annum per employee All redundant Grade A and B employees would immediately receive 70% of their annual salary; Grade C and Demployees would immediately receive 85% of their annual salary. The packaging warehouse, which will no longer be required if the outsourcing goes ahead, is rented from a localcompany under a lease that still has five years to run. There is no clause for the Painless Co to terminate thelease early. The company paid a $100,000 lump sum at the start of the lease five years ago. Painless Co spreadsthe cost of this lump sum over the life of the lease, charging $10,000 each year as an expense in its IncomeStatement. In addition to this, the annual rental costs are $25,000 per annum, also an expense in the IncomeStatement. The company pays the rent annually in advance, the last payment having been made yesterday.
Painless Co hopes to sub-let this warehouse for $30,000 per annum, but expects it to take one year before asuitable tenant is found. Rent will then be charged annually in advance.
The company owns the packaging factory. If this proposal goes ahead, the factory will either be sold or leasedimmediately. The company has already met a potential buyer for the factory who would pay $300,000 for itimmediately. However, the interested party would alternatively be prepared to lease the factory for a five-yearperiod at a rental of $55,000 per annum, payable annually in advance. The value of the factory, in present valueterms, at the end of the rental period would be $65,000.
Annual sales of the company's paracetamol and ibuprofen tablets are expected to be 64,000 and 67,200respectively. These are expected to remain the same for the next five years.
The total costs (excluding labour, which is dealt with in note 1) of making one thousand boxes of paracetamoltablets and one thousand boxes of ibuprofen tablets are $7·80 and $7·50 respectively. Alternatively, therespective costs, per thousand, of buying the boxes in are $13 for paracetamol and $14·20 for ibuprofen. The company's cost of capital is 10%.
Assume that all cash flows occur at the end of each year, unless told otherwise.
Answers should be given in $'000s.
Calculate the net present value of the proposal to outsource the manufacture of the packaging to Chenway, using
the discount table extracts provided, and conclude whether the proposal should go ahead.

Discount factor table extracts Annuity factor table extracts (20 marks)
Rich Co is a cash-rich company wanting to maximise the return on its cash balances over the next six months. Itcurrently has $5,000,000 cash which it is ready to invest. Cash movements over the next six months are expectedto be as follows: Cash inflow in quarter 1 Cash outflow in quarter 1 Cash inflow in quarter 2 Cash outflow in quarter 2 Based on market information available, interest rates for the year ahead have been estimated for deposits of cash withvarying maturity periods. These are as follows: Deposit period 3 month A ‘quarter' is a three-month period.
All of Rich Co's cash inflows and outflows take place on the last day of the quarter. This means that any surpluscash is available for investment from the first day of the next quarter.
When cash is placed on deposit for the set period of three months or six months, it is available for withdrawalon the last day of that quarter. It can be used to pay cash outflows immediately.
The Quarter 1 annual rates are the interest rates available as of today, for cash placed on deposit for periods ofthree months and six months. The Quarter 2 annual rates are estimates of the annual interest rates for cash placed on deposit for periods ofthree months and six months.
You should assume that the annual rates given are simple rates of interest, rather than compound rates. In addition,you should assume that any interest earned during the first quarter is not available for re-investment in the secondquarter.
(a) Prepare a cash forecast for each of the two quarters showing clearly the opening and closing balances at the
end of each quarter.
(b) Calculate which deposits should be made in order to maximise income, clearly showing the income
receivable from the different options.
(c) Rich Co's parent company is considering centralising the treasury function.
Describe four advantages of having a centralised treasury department.
(20 marks)
Long-term finance.
(a) Explain what a stock market is and how it operates.
(b) Briefly describe any well-known stock market.
(c) Describe the features of the following different types of securities:
Loan stock;
(ii) Convertible bonds;
(iii) Ordinary shares; and
(20 marks)
Curtain Co is a small, family-run business, which makes made-to-measure curtains for its customers. Curtain Co doesnot deal directly with the general public. Its customers consist mainly of local furnishing stores. Its turnover for thenext year is forecast to be $600,000. Curtain Co is always overdrawn and pays interest on its overdraft at 8% perannum.
Once a pair of curtains has been made, an invoice is raised and sent with the curtains to the customer. Invoices aresettled by cheque for each pair of curtains often resulting in several cheques from the same customer each month. Itis now considering introducing a system, whereby it invoices customers at the end of each month for their totaldespatches that month, requesting payment by standing order or direct debit within thirty days. It is expected that allCurtain Co's customers would take advantage of the full credit period, but not exceed it.
Curtain Co's owners have a few concerns about the new system. They are not sure whether standing order or directdebit payments would be more suitable for the business. Also, they have concerns about the cost of offering increasedcredit as, at present, customers pay their invoices 14 days, on average, after the month of sale. The business currentlypays $1·80 for each cheque banked; it would expect to bank 2,000 cheques over the coming year if it does not makechanges in the payment method. Its bank does not charge it for receipts into its account by standing order or directdebit.
(a) Briefly outline the main features of:
standing order payments; and
(ii) direct debit payments;
clearly distinguishing between the two. Recommend which method would be more suitable for Curtain Co's

current total finance costs (cheques and interest); and
(ii) new total finance costs (cheques and interest) if the new system is introduced.
Conclude, from these calculations, whether the new system should be introduced.
(c) Curtain Co is considering obtaining trade references for its potential new customers.
List five pieces of information that you would expect to be present in a trade reference and state why such
references may not be very reliable without further evidence being obtained to support them.

(20 marks)
End of Question Paper


Microsoft word - autism is treatable.doc

Autism is treatable: hope that is real, treatments that heal. Townsend Letter for Doctors and Patients; 10/1/2004; Reagan, Lisa "My name is Michael Augerson. I'm autistic. Basically when you're autistic, you feel urges to do things that you really need to do. You can't stop yourself. Like you have taken a drug. You have no idea what others are talking about, because it doesn't make any sense to you. Others think of you as a freak, loon, or a retard.

After a diagnosis

After a diagnosis Receiving a diagnosis of dementia can be a difficult and emotional time. The diagnosis may come as a shock or it might provide answers to the problems you, or someone close to you, have been having. It can be hard to come to terms with it and know what to do next. Some people might even feel a sense