Finance and accounting, just calculate, a phase test that is urgently needed. finish by 6 hours

However, photos of text based answers are not allowed. Your module leader will be available via email to clarify any issues relating to the exam paper (but not to provide subject specific support). If you experience any technical difficulties during the exam, please contact IT Services (+44 (0) 24 7765 7777 – select Option 1, or email [email protected] ). If you are unable to complete the assessment, please contact Faculty Registry (Facu [email protected] ). …Continued… 5010ACC -R Page 3 of 7 Question One: Gaelar Ltd is an Edinburgh based company that manufacture a special type of hybrid violin called “Scottish Best” violin. As a management consultant, you have been hired to review the profitability of the company. The costs for each “Scottish Best” violin are as follows: £ Direct materials 300 Direct labour cost (each violin takes 5 hours) 150 Other variable manufacturing costs 70 Annual fixed costs 750,000 Demand for the “Scottish Best” violin is growing and the company expects to produce and sell 3,000 units at a selling price of £800 next year. Required The managing di rector of the company has requested that you calculate the following information to p resent in the next board meeting. a) The contribution per unit and the breakeven point in unit sales and revenue (£). (5 marks) b) The margin of safety in percentage and unit terms. (5 marks) c) The number of units to be sold to make a profit of £ 200,000. (5 marks) However following a recent review of wages paid by competitors, Gaelar ltd have agreed to increase hourly wages for its production staff to £34 to avoid losing skilled staff. They also forecast that annual fixed costs will increase to £800,000. Consequently they have decided to increase the selling price by 6%, but this has reduced the sales forecast to 2,800 violins. Other costs are expected to remain the same. Required From this new information, you are asked to calculate the fo llowing: d) The contribution per unit and the breakeven point in unit sales and revenue. (5 marks) e) The new margin of safety in percentage and unit terms. (5 marks) f) Exp lain the impact these changes to budget assumptions is likely to have on the risk of Gaelar ltd making a loss and suggest steps the company could take to reduce the risk of making a loss.

(350 words - 15 marks) (Total 4 0 marks) 5010ACC -R Page 4 of 7 Question Two: The following is an extract from the financial statements of Hope Lt d: Statement of Financial Position as at 31.12.20 21 £000 31.12.20 22 £000 Non -Current (fixed) Assets 560 856 Current Assets Inventory 94 124 Trade Receivables (Debtors) 140 312 Cash 76 34 Total Current Assets 310 470 Current Liabilities Trade Payables (Creditors) 78 218 Accrued Salaries and Other Payables 64 124 Total Current Liabilities 142 342 Equity 600 822 Required: (a) From the above information, calculate the following ratios for 2021 and 2022 (round up your answer to two decimal points) 1. Return on Capital Employed (ROCE) 2. Current ratio 3. Trade receivables settlement period ( Debtor’s days) 4. Gross Profit margin 5. Acid Test ratio 6. Operating pro fit margin (12 Marks) Income statement for Year Ended 31.12. 2021 £000 Year Ended 31.12.20 22 £000 Sales 1168 1944 Cost of Goods Sold 778 1370 Gross Profit 390 574 Expenses 296 388 Operating Profit 94 186 Debenture Interest 0 16 Tax 32 78 Net Profit after Interest and Tax 62 92 ….Continued… 5010ACC -R Page 5 of 7 (b) What is the purpose of Ratio Analysis? (100 words - 6 Marks ) (c) Discuss SIX comparability issues of usi ng financial ratios (25 0 words - 12 Marks ) [TOTAL 30 Marks] ….Continued… 5010ACC -R Page 6 of 7 Question Three: Wyken Ltd , a company based in the West Midlands region of England, produces plastic bottles for use in sporting activities . A capital investment project which is hoped will help the company improve its profitability has bee n identified by Mr Peter Martins , the executive director for business development at Wyken Ltd . Project A would reduce the costs of producing the boxes for th e bottles as well as increas e the speed of producing the plastic bottles . The company’s cost of capital is currently 10 % and the company uses straight -line depreciation over the life of its projects. Details of the investments required and the expected cash in -flow resulting from the project over their six -year live are as follows: Project A Year £ Initial capital expenditure 0 55 0,000 Annual cash in flow 1 140,000 2 150,000 3 160,000 4 155,000 5 140,000 6 120,000 Resale value of equipment 6 65,000 Required a) Using the following methods of investment app raisal, advise the company if the project should be undertaken: (300 words) i. Payback period (2.5 marks) ii. Profitability Index (2.5 marks) iii. Net present value (3 marks) b) Discuss the results of your calculations in part (a) of this question, and make a recommendation to management whether or not it should undertake the project. Justify your recommendation. (250 words - 11 marks) c) Critically discuss the use of Net Present Value (NPV) and the Accounting Rate of Return (ARR) as methods of investment appraisal. (250 words - 11 marks) [Total 30 Marks] End of Questions Page 7 of 7 END OF PAPER PRESENT VALUE of £1 Time Rate 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 1 0.990 0.980 0.971 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.901 0.893 0.885 0.877 0.870 0.862 0.855 0.847 0.840 0.833 2 0.980 0.961 0.943 0.925 0.907 0.890 0.873 0.857 0.842 0.826 0.812 0.797 0.783 0.769 0.756 0.743 0.731 0.718 0.706 0.694 3 0.971 0.942 0.915 0.889 0.864 0.840 0.816 0.794 0.772 0.751 0.731 0.712 0.693 0.675 0.658 0.641 0.624 0.609 0.593 0.579 4 0.961 0.924 0.888 0.855 0.823 0.792 0.763 0.735 0.708 0.683 0.659 0.636 0.613 0.592 0.572 0.552 0.534 0.516 0.499 0.482 5 0.951 0.906 0.863 0.822 0.784 0.747 0.713 0.681 0.650 0.621 0.593 0.567 0.543 0.519 0.497 0.476 0.456 0.437 0.419 0.402 6 0.942 0.888 0.837 0.790 0.746 0.705 0.666 0.630 0.596 0.564 0.535 0.507 0.480 0.456 0.432 0.410 0.390 0.370 0.352 0.335 7 0.933 0.871 0.813 0.760 0.711 0.665 0.623 0.583 0.547 0.513 0.482 0.452 0.425 0.400 0.376 0.354 0.333 0.314 0.296 0.279 8 0.923 0.853 0.789 0.731 0.677 0.627 0.582 0.540 0.502 0.467 0.434 0.404 0.376 0.351 0.327 0.305 0.285 0.266 0.249 0.233 9 0.914 0.837 0.766 0.703 0.645 0.592 0.544 0.500 0.460 0.424 0.391 0.361 0.333 0.308 0.284 0.263 0.243 0.225 0.209 0.194 10 0.905 0.820 0.744 0.676 0.614 0.558 0.508 0.463 0.422 0.386 0.352 0.322 0.295 0.270 0.247 0.227 0.208 0.191 0.176 0.162 11 0.896 0.804 0.722 0.650 0.585 0.527 0.475 0.429 0.388 0.350 0.317 0.287 0.261 0.237 0.215 0.195 0.178 0.162 0.148 0.135 12 0.887 0.788 0.701 0.625 0.557 0.497 0.444 0.397 0.356 0.319 0.286 0.257 0.231 0.208 0.187 0.168 0.152 0.137 0.124 0.112 13 0.879 0.773 0.681 0.601 0.530 0.469 0.415 0.368 0.326 0.290 0.258 0.229 0.204 0.182 0.163 0.145 0.130 0.116 0.104 0.093 14 0.870 0.758 0.661 0.577 0.505 0.442 0.388 0.340 0.299 0.263 0.232 0.205 0.181 0.160 0.141 0.125 0.111 0.099 0.088 0.078 15 0.861 0.743 0.642 0.555 0.481 0.417 0.362 0.315 0.275 0.239 0.209 0.183 0.160 0.140 0.123 0.108 0.095 0.084 0.074 0.065 16 0.853 0.728 0.623 0.534 0.458 0.394 0.339 0.292 0.252 0.218 0.188 0.163 0.141 0.123 0.107 0.093 0.081 0.071 0.062 0.054 17 0.844 0.714 0.605 0.513 0.436 0.371 0.317 0.270 0.231 0.198 0.170 0.146 0.125 0.108 0.093 0.080 0.069 0.060 0.052 0.045 18 0.836 0.700 0.587 0.494 0.416 0.350 0.296 0.250 0.212 0.180 0.153 0.130 0.111 0.095 0.081 0.069 0.059 0.051 0.044 0.038 19 0.828 0.686 0.570 0.475 0.396 0.331 0.277 0.232 0.194 0.164 0.138 0.116 0.098 0.083 0.070 0.060 0.051 0.043 0.037 0.031 20 0.820 0.673 0.554 0.456 0.377 0.312 0.258 0.215 0.178 0.149 0.124 0.104 0.087 0.073 0.061 0.051 0.043 0.037 0.031 0.026