Questions . It was hard pls help.
Q1)The standard material specification for a unit of production is 2 kg costing $7.50 per kilo.
Budgeted production for a period was 600 units, actual production was 620 units. The actual
material cost of purchasing 1200 kilos was $9400.
What was the material price variance?
Ans: $100 adverse
my working:
(sp-ap) *aq
(7.5 - 9400/1200) *1200
$400 (A) ?
Q2)Discounting methods have been used to evaluate an investment project over a three year life.
The project will produce annual net inflows of $2 m.
$500 000 of the initial investment can be recovered at the end of the third year.
Discount factors at 10 % are:
year factor
1 0.91
2 0.83
3 0.75
What is the present value of project cash inflows?
Ans: $5.36 m
my working:
year 10% NCF PV
0 1 (500k) (500k)
1 0.91 200k 1820k
2 0.83 200k 1660k
3 0.75 200k 1500k
Q3)A company has the following capital structure:
50 000 ordinary $10 shares 500 000
1 000 000 5 % convertible loan stock 1 000 000
One half of the loan stock holders converted at the rate of three new ordinary shares of $10 each
per $100 of loan stock.
How many new ordinary shares were issued?
Ans: $15 000
complete dont understand loan change to ordinary share or vise versa.
