Business Accounting and Finance by Tony Davies, Ian Crawford | 9780273723127 | 027372312X | Holooly

Accounting for Business

Business Accounting and Finance

63 SOLVED PROBLEMS

Question: 13.1

Nilbog Ltd makes garden gnomes. It uses standard costs and has budgeted to produce and sell 130,000 Fishermen (their top-of-the-range gnome) in 2010. Nilbog’s budget for the year is phased over 13 four-week periods, and production and sales revenues are spread evenly in the budget. ...

Verified Answer:

Flexed budget Budget Flexed Actual Units (...

Question: 4.4

The Partex company began trading in 2008, and all sales are made to customers on credit. The company is in a sector that suff ers from a high level of bad debts, and a provision for doubtful debts of 4% of outstanding accounts receivable is made at each year end. Information elating to 2008 ...

Verified Answer:

2008 2009 2010 £ £ £ (i) Balance sheet as at ...

Question: 14.5

Yor plc is a fast-growing, hi-tech business. Its income statement for the year ended 30 September 2010 and its balance sheet as at 30 September 2010 are shown below. The company has the opportunity to take on a major project that will significantly improve its profitability in the forthcoming ...

Verified Answer:

(i) Yor plc Income statement for the year ended...

Question: 15.8

Alive & Kicking Ltd (AAK) owns a disused warehouse in which a promoter runs regular small gigs.There are currently no facilities to provide drinks. The owners of AAK intend to provide such facilities and can obtain funding to cover capital costs. This would have to be repaid over five years at an ...

Verified Answer:

(i) Equipment Running costs Lighting, heating...

Question: 14.3

Lucky Jim plc has the opportunity to manufacture a particular type of self-tapping screw, for a client company, that would become indispensable in a particular niche market in the engineering field Development of the product requires an initial investment of £200,000 in the project. Development ...

Verified Answer:

If shareholders’ equity is E and the financial deb...

Question: 14.4

You are required to compute the MVA for 2009, 2010 and 2011 from the estimated information for a large supermarket group. ...

Verified Answer:

2011 2010 2009 Adjusted net assets £5,000 m £4,7...

Question: 16.5

Worrall plc’s sales revenue for 2009 was £8m. Costs of sales were 80% of sales revenue. Bad debts were 2% of sales. Cost of sales variable costs were 90% and fixed costs were 10%. Worrall’s cost of finance is 10% per annum. Worrall plc allows its customers 60 days’ credit, but is now considering ...

Verified Answer:

Cost of sales is 80% of sales Variable cost of...

Question: 16.1

Oliver Ltd’s sales revenue budget for 2010 is £5,300,000. Oliver Ltd manufactures components for television sets and its production costs as a percentage of sales revenue are: ...

Verified Answer:

Production costs £ Raw materials [40% × ...

Question: 15.9

Lew Rolls plc is an international group that manufactures and distributes bathroom fittings to major building supply retailers and DIY chains. The board of Rolls is currently considering four projects to work with four different customers to develop new bathroom ranges (toilet, bidet, bath, basin ...

Verified Answer:

(i) Super Superlux Exec Excel 10% 20% 1...

Question: 15.3

Rainbow plc’s business is organised into divisions. For operating purposes, each division is regarded as an investment centre, with divisional managers enjoying substantial autonomy in their selection of investment projects. Divisional managers are rewarded via a remuneration package, which is ...

Verified Answer:

(i) From a divisional point of view Divisional man...

Loading...