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sources of finance

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › sources of finance

  • This topic has 3 replies, 2 voices, and was last updated 8 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • November 30, 2016 at 8:42 am #352526
    Moloantoa
    Member
    • Topics: 30
    • Replies: 32
    • ☆☆

    dear John

    please help;

    in a sep/Dec 15 hybrid question paper

    question 4 (a) deriving the cost of sales in a projected position got me lost on how the arrived @ $115.4

    there is also finance cost of $4.4
    (which I believe should be 10%of $31.6)

    and the non current liabilities have increased with the unknown figure (not specified in question)

    please help me understand this, I now believe the solution has got some errors or the question itself

    November 30, 2016 at 3:21 pm #352600
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54679
    • ☆☆☆☆☆

    The question and the answer are both perfectly correct.

    The current cost of sales is 112.0 of which 40% (44.8M) and the rest (67.2) are variable.
    The question says that the fixed will not change – so will stay at 44.8M, and that the variable will increase in line with income. Since the income increases by 5%, so to therefore the variable cost will increase by 5% and will be 67.2 x 1.05 = 70.56M.
    So the total costs will be 44.8 + 70.56 = 115.36 (the examiner has rounded it to 115.4).

    The company is raising an additional 20M by an issue of 8% loan notes, so they will pay extra interest of 20M x 8% = 1.6M per year. They are already paying 2.8M and so in future they will be paying 2.8M + 1.6M = 4.4M per year.

    The first line of the question says they are raising 20M by an issue of loan notes. So non-current liabilities have increased by 20M to 56M.

    December 1, 2016 at 7:32 am #352781
    Moloantoa
    Member
    • Topics: 30
    • Replies: 32
    • ☆☆

    thank you Mr Moffat, I didn’t realise… the pressure must be too high on me

    December 1, 2016 at 3:20 pm #352882
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54679
    • ☆☆☆☆☆

    You are welcome 🙂

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    Posts
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