P4: June 2008 past paper, Q # 5 Neptune:

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    Anonymous
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    Adjusted Present value:
    Here fixed overheads was not part of the calculation, and in the question
    it was not mentioned that wthether the overheads are allocated or specific overheads,in the question 5%growing rate also provided which may be indicator of specific overheads bt in the examiner anwer the overheads was not inluded! why?


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    John Moffat
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    The question says that the overheads are activity based, which implies that the are allocated rather than specific. (The 5% does not itself imply that they are specific – existing overheads can be growing at 5%)

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