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Sir, please help me to understand the problem.
I feel I was poorly prepared for Perfomance and mngt control module.Comoany’s Draft of the plan for next year’s is unacceptable because it shows decline in profit and ROI:
all in millions
year1 year2 year3
PBIT 3. 0 2. 7 2. 4
Asset
base
(beg.
of
year) 24 25 26one of proposals:
capital expenditure in years 1 and 2, followed by operating cash flow in year 3:y1 y2 y3 NPV
-0. 5 -0. 5 2. 0 0. 634in Workings to this proposal it is shown:
y. 1 y. 2 y. 3
PBIT 3. 0 2. 7 4. 4
Asset
base 24 25. 5 27I didn’t get the last row-asset base figures. Why not:
Asset
base 23. 5 24. 5 27?
Because they are using the assets at the start of the year, on the basis that they are what will have earned the profit (and also because there is no choice if they are going to be consistent each year).
(As a matter of interest, NPV cannot be examined in F5 even though it is not relevant anyway in this question.)
Thank you so much for reply. Please, clarify, do you mean capital expenditure was made later and figures shown are before expenditure?
year 1
24year 2
25. 5 = 24-0. 5+2year 3
27=25. 5-0. 5+2At the start of the first year, the assets were 24.
If they invest another 0.5 during the first year, then the assets at the start of the second year will be 25 + 0.5 = 25.5 (they are going to be 25 if they don’t do the proposal, so they will be 0.5 higher if they do).
If they invest another 0.5 during the second year, then the assets at the start of the third year will be 26 + 0.5 + 0.5 = 27
Now i understand. Thank you. Sir, I’m now puzzled, how to see this from the problem? I can’t find such information from the text…
It is not something that anyone would have learned – it is not as though it is a rule to be learnt. It is more interpreting the question and that is something you can only get used to by practicing lots of exam standard questions from your Revision Kit.
Thank you, Sir. Please see the second problem. I tried to post it several times separately.
kaplan kit (exp. June 2016 ), 289 (Woodside charity) Woodside is a local charity. Fund rising target $700000. The budget for last year based on following forcast: free meals – 18250 meals at $5 overnight shelter – 10000 bed night's at $30 advice centre – 3000 sessions at $20 campaigning and advertising – $150000 Actual funds raised- $620000 Operating statement: budget surplus 98750 funding shortfall (80000) Net 18750 variancies: FREE MEALS price 4000(A) usage 8750 (A) OVERNIGHT SHELTER price 4380 (A) usage 31000 (F) ADVICE CENTER price 9100 (A) usage 7500 (A) CAMPAIGNING AND ADVERTISING expenditure 15000 (A) FIXED COSTS expenditure 18000 (A) Actual total (16980) In workings it is indicated: Free meals provision cost 12750 (14%) more than budgeted. Is this a 14% of 18250 * 5? Then, variable cost of overnight shelter 26620 (11%) less than budgeted. Why 11%? Variable advice centre 16600 (37%) above budget. Why 17%? This was due to increased usage of service which was up from 3000 to 3500( Where is this described in problem? ) and average cost rising from $15 to $17. 60( Where is this described in the problem? )
I see… Thank you very much for your help. The last question. Is it enough to cover Kit or should we cover your Online Kit also?
Sir, I dont understand whats hapoening with my phone. The last comment is for previous question. The previous long text – I tried to post it separately, there was a mistake appearing all the time smth about duplicate.
I can’t answer your question about Woodside completely without seeing the whole question, and I do not have the Kaplan revision kit.
However, with regard to free meals, there is a price variance of 4,000 adverse and a usage variance of 8,750. Therefore the actual total cost is 4,000 + 8750 = 12,750 more than budget. Since the budget is 18,250 x $5 = $91,250, and extra 12,750 is an extra 12,750/91,250 = 14%.
It is the same logic for the others.I don’t know what you mean by our ‘Online Kit’. We have short online tests on each chapter in our free lecture notes, and we have an online practice exam, but we do not provide an online Revision Kit.
Assuming that you have watched all of my free lectures, you should spend your time attempting every question in your kit and learning from any mistakes that you make.
Sir, I mean those “F5 revision kit live” section on this site. There are many hybrid exam explanation lectures.Anyways, I decided to cover them all together with my kaplan kit.
Ok, Sir, thank you for advice.
If you don’t mind, I will write the second problem. I will type it as it comes in the Kit.
Woodside is a local charity dedicated to helping homeless people in a large city. The charity owns and manages shelter that provides free overnight accommodation for up to 30 people, offers free meals each and every night of the year to homeless people who are unable to buy food, and runs a free advice centre to help homeless people to find suitable housing and gain financial aid. Woodside depends entirely on public donations to finance its activities and had a fundraising target for the last year of $700 000. The budget for the last year was based on the following forecast activity levels and expected costs.
free meals – 18250 meals at $5 overnight
shelter – 10000 bed nights at $30 per night
advice centre – 3000 sessions at $20
campaigning and advertising – $150000The number of free meals and the number of beds occupied each night depends on both the weather and the season of the year. The Woodside charity has three full-time staff and a large number of voluntary helpers.
The actual amount of funds raised in the last year was $620 000
An operating statement has been prepared as follows:
budget surplus 98750
funding shortfall (80000)
Net 18750variancies:
FREE MEALS
price 4000(A)
usage 8750 (A)OVERNIGHT SHELTER
price 4380 (A)
usage 31000 (F)ADVICE CENTER
price 9100 (A)
usage 7500 (A)CAMPAIGNING AND ADVERTISING
expenditure 15000 (A)FIXED COSTS
expenditure 18000 (A)total Favorable – 31 000
total Adverse – 66 730
Net – (35 730)Actual shortfall (16 980)
Required:
(a) Discuss the charity’s performance over the last year.The following is not clear to me:
If it is written in Workings, that Free meals provision cost 12750 (14%) more than budgeted and this is a 14% of (18250 * 5),Then, why variable cost of overnight shelter 26620 (11%) less than budgeted. Why 11%? Variable advice centre 16600 (37%) above budget. Why 17%? It is written: This was due to increased usage of service which was up from 3000 to 3500( Where is this described in problem? ) and average cost rising from $15 to $17. 60( Where is this described in the problem? )
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