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@arfan54 said:
This is about the Q2.
Is any one have idea whether the full capacity of the factory was given? As I messed up with this question due to time pressure.. I put a note in option 1 assuming BBS will be undertaking the special contract in each month that would utilise the available spare capacity.. So there will be no spare capacity available for fired bricks. In that case labour cost will turn relevant..I worked out the full capacity by dividing the number of un-fired bricks currently made per month (800,000) by the number of un-fired bricks they make in an hour (70) to get 11,429 hours and added the spare capacity (2,400) to this to get 13,829 hours. Being such an ugly number I’m not sure it’s correct but at least I gave it a go!
@mha88 said:
For q3, i wrote process 3 as high complexity and strategic importance because of the complexity of the law and its changes with the ruling political party and any breach of law can lead to punitive fines damaging reputation and its funding..but suggested to outsource the legal function to cut cost..valid or not??If you suggested to outsource it then surely that implies it’s of low strategic importance? The fact that they must follow the laws and regulations is important but it isn’t integral to the company’s strategy; it’s not something that creates value for the consumer. But either way as long as you explain your answer then you should be able to pick up some marks.
Yeah Q1 part C was Balogun Hope Hailey I believe, scope of change vs nature of change. I also had it down as requiring evolution. On the whole I didn’t think Q1 was too bad as long as you followed the models.
For Q2 I’m not 100% sure I got the definition of relevant costing correct but I’m hoping that as long as my analysis and conclusions were sound that I should be able to pick up some marks. Second part was talked about the advantages and disadvantages of absorption costing vs relevant costing. Kinda waffled my way through that one.
For Q3 I had process 2 down as improvement and process 3 as outsource. Regarding process 1 I just talked about benefits of COTS vs bespoke then general risks of COTS and software in general and how to mitigate them.
Honestly thought this was the hardest ACCA exam I’ve had to take so far. Somehow passed with 62! Only two to go now.
@ineves said:
Finance effect cant be annuity because it has to be translated into USD first at different exchange rates before discounting so will result in different cashflows each yearI’m pretty sure the loan was already in USD (given by the “world bank”) so you use the 13% (risk adjusted, 100% equity financed) rate to discount the cash flows and then worked out the financing side effects of the loan.
Before that I worked out the cash flows in the foreign currency, converted these into USD using the relevant exchange rate, then added the income in USD from the parts sold to the subsidiary (post US tax). I think the question said something about the tax being mutually exclusive, i.e. once you’ve paid tax in one country you don’t have to pay it in the other, despite the different rates.
What did people use for the loan amount? I remember the bank saying that they’d fully fund the land, plant & machinery costs so I used the total of that + the initial working capital.
Wasn’t too sure what to write for the part regarding the “business risk” either!
@sharique123 said:
Comparison is necessary required because without conversion you cant know which value will be higher conversion value or bond value? It is necessary to discount from 8 years to 7 years (1 year backwards) + 1 year interest.Agreed – for the first part I calculated NPVs for the conversion after 7 years and nominal redemption after 8 years, and chose the higher (latter) value. For the second part I calculated the NPV of the conversion again but with the 6% yearly increase, and chose this as it was higher. Bit tricky since I hadn’t seen it in a question before but it makes sense when you think about it. I wouldn’t worry either way though, should only be max 1-2 marks lost.
Overall I thought the paper was OK, not the easiest set of MCQs but nothing too out of the ordinary in Section B.