Fig 1.7
What is the average annual cost for servicing each of the 5 manufacturing plants (assume 4 weeks in a month)?
£3,300
£12,400
£16,500
£39,600
£48,000
Step 1 – total the servicing costs 1,050 + 1,100 + 950 + 1,025 + 875 = £5,000 per week
Step 2 – calculate the monthly cost 5,000 x 4 = £20,000 per month
Step 3 – calculate the average monthly cost £20,000 / 5 = £4,000 per month
Step 4 – calculate the average annual cost 4,000 x 12 = £48,000
Thus the correct answer is (E), £48,000
For the Glasgow manufacturing plant, which maintenance cost(s) represent approximately 7% of the total costs?
Rent and Utilities
Rent
Utilities
Insurance
Insurance and Utilities
Step 1 - For the Glasgow plant, calculate the total costs 195 + 875 + 300 + 189 + 720 + 425 = 2,704
Step 2 - For the Glasgow plant, calculate each cost as a % of the total cost Insurance = 100% x 195/2,704 = 7% Servicing = 100% x 875/2,704 = 32% Rent = 100% x 300/2,704 = 11% Utilities = 100% x 189/2,704 = 7% Administration = 100% x 720/2,704 = 27% Misc = 100% x 425/2,704 = 16%
Tip: to save time, you can stop after you’ve calculated 7% for Insurance and just scan across the row to see if any other costs are close to £195. You will see that Utilities are.
Thus the correct answer is (E), Insurance and Utilities
Averaged across the Manufacturing Plants, put the average values for each of the maintenance costs in decreasing size order, starting with the highest.
Servicing, Administration, Misc., Rent, Insurance, Utilities
Servicing, Administration, Rent, Misc., Utilities, Insurance
Servicing, Administration, Rent, Misc., Insurance, Utilities
Servicing, Administration, Misc., Rent, Utilities, Insurance
None of these
Calculate the average for each maintenance cost:
Insurance = 192.2
Servicing = 1,000 Rent = 295 Utilities = 185.8 Administration = 589 Misc = 450
Thus the correct answer is (A), Servicing, Administration, Misc., Rent, Insurance, Utilities
Fig 1.6
Which equity fund holding(s) hold less than double the number of Shares compared to Bonds?
UK
US
Emerging Markets
UK, US
UK, US, Emerging Markets
The information that we need is shown in the graph. Calculate the Shares: Bonds ratios for each equity fund
The UK fund has exactly double the number of Shares compared to Bonds. Only the Emerging Markets has less than double the number of Shares compared to Bonds.
Thus the correct answer is (C) Emerging Markets
Which of the components of the UK and US equity funds have the highest and the lowest value?
lowest is US Fund (Bonds); highest is UK Fund (Derivatives)
lowest is US Fund (Shares); highest is UK Fund (Shares)
lowest is UK Fund (Bonds); highest is US Fund (Shares)
lowest is US Fund (Bonds); highest is UK Fund (Shares)
lowest is US Fund (Derivatives); highest is UK Fund (Shares)
Tip: Note that just from looking at the graph and table we know the overall US fund is smaller than the UK fund and the smallest fraction within the US find (10% to Derivatives) is not larger than the smallest fraction within the UK fund. So we can instantly say the smallest fraction is Derivatives in the US fund. As it happens there is only one multiple choice with this as an option so we know (E) is the correct answer. In full, the solution is as follows. The information that we need is shown in both the graph and the table.
Calculate the value of each component of each equity fund, using this formula: Component value = Total value x Equity fund component % UK Fund (Cash) = 55.6 x 10% = 5.56 (£million)
See table below for other component values:
Thus the correct answer is (E), lowest is US Fund (Derivatives); highest is UK Fund (Shares)
