Ben： 2

1 The Great Western Cake Company (GWCC) is a well-established manufacturer of specialist flour confectionery

products, including cakes. GWCC sells its products to national supermarket chains. The company’s success during

recent years is largely attributable to its ability to develop innovative products which appeal to the food selectors within

national supermarket chains.

The marketing department of Superstores plc, a national supermarket chain has asked GWCC to manufacture a cake

known as the ‘Mighty Ben’. Mighty Ben is a character who has recently appeared in a film which was broadcast

around the world. The cake is expected to have a minimum market life of one year although the marketing department

consider that this might extend to eighteen months.

The management accountant of GWCC has collated the following estimated information in respect of the Mighty Ben

cake:

(1) Superstores plc has decided on a launch price of ￡20·25 for the Mighty Ben cake and it is expected that this

price will be maintained for the duration of the product’s life. Superstores plc will apply a 35% mark-up on the

purchase price of each cake from GWCC.

(2) Sales of the Mighty Ben cake are expected to be 100,000 units per month during the first twelve months.

Thereafter sales of the Mighty Ben cake are expected to decrease by 10,000 units in each subsequent month.

(3) Due to the relatively short shelf-life of the Mighty Ben cake, management has decided to manufacture the cakes

on a ‘just-in-time’ basis for delivery in accordance with agreed schedules. The cakes will be manufactured in

batches of 1,000. Direct materials input into the baking process will cost ￡7,000 per batch for each of the first

three months’ production. The material cost of the next three months’ production is expected to be 95% of the

cost of the first three months’ production. All batches manufactured thereafter will cost 90% of the cost of the

second three months’ production.

(4) Packaging costs will amount to ￡0·75 per cake. The original costs of the artwork and design of the packaging

will amount to ￡24,000. Superstores plc will reimburse GWCC ￡8,000 in the event that the product is

withdrawn from sale after twelve months.

(5) The design of the Mighty Ben cake is such that it is required to be hand-finished. A 75% learning curve will

apply to the total labour time requirement until the end of month five. Thereafter a steady state will apply with

labour time required per batch stabilising at that of the final batch in month five. The labour requirement for the

first batch of Mighty Ben cakes to be manufactured is expected to be 6,000 hours at ￡10 per hour.

(6) A royalty of 5% of sales revenue (subject to a maximum royalty of ￡1·1 million) will be payable by GWCC to the

owners of the Mighty Ben copyright.

(7) Variable overheads are estimated at ￡3·50 per direct labour hour.

(8) The manufacture of the Mighty Ben cake will increase fixed overheads by ￡75,000 per month.

(9) In order to provide a production facility dedicated to the Mighty Ben cake, an investment of ￡1,900,000 will be

required and this will be fully depreciated over twelve months.

(10) The directors of GWCC require an average annual return of 35% on their investment over 12 months and

18 months.

(11) Ignore taxation and the present value of cash flows.

Note: Learning curve formula:

y = axb

where y = average cost per batch

a = the cost of the initial batch

x = the total number of batches

b = learning index (= –0·415 for 75% learning rate)

Required:

(a) Prepare detailed calculations to show whether the manufacture of Mighty Ben cakes will provide the required

rate of return for GWCC over periods of twelve months and eighteen months. (20 marks)

(b) For this part, assume today’s date is 1 May 2010.

Bill and Ben decided not to sell their company, and instead expanded the business themselves. Ben, however,

is now pursuing other interests, and is no longer involved with the day to day activities of Flower Limited. Bill

believes that the company would be better off without Ben as a voting shareholder, and wishes to buy Ben’s

shares. However, Bill does not have sufficient funds to buy the shares himself, and so is wondering if the

company could acquire the shares instead.

The proposed price for Ben’s shares would be ￡500,000. Both Bill and Ben pay income tax at the higher rate.

Required:

Write a letter to Ben:

(1) stating the income tax (IT) and/or capital gains tax (CGT) implications for Ben if Flower Limited were to

repurchase his 50% holding of ordinary shares, immediately in May 2010; and

(2) advising him of any available planning options that might improve this tax position. Clearly explain any

conditions which must be satisfied and quantify the tax savings which may result.

(13 marks)

Assume that the corporation tax rates for the financial year 2005 and the income tax rates and allowances

for the tax year 2005/06 apply throughout this question.

A.Scafell

B.Ben Nevis

C.the Cotswolds

D.the Forth

Ben has to study for the English test．（改为否定句）

Ben ______ ______ ______study for the English test．

4 (a) For this part, assume today’s date is 1 March 2006.

Bill and Ben each own 50% of the ordinary share capital in Flower Limited, an unquoted UK trading company

that makes electronic toys. Flower Limited was incorporated on 1 August 2005 with 1,000 ￡1 ordinary shares,

and commenced trading on the same day. The business has been successful, and the company has accumulated

a large cash balance of ￡180,000, which is to be used to purchase a new factory. However, Bill and Ben have

received an offer from a rival company, which they are considering. The offer provides Bill and Ben with two

alternative methods of payment for the purchase of their shares:

(i) ￡480,000 for the company, inclusive of the ￡180,000 cash balance.

(ii) ￡300,000 for the company assuming the cash available for the factory purchase is extracted prior to sale.

Bill and Ben each currently receive a gross salary of ￡3,750 per month from Flower Limited. Part of the offer

terms is that Bill and Ben would be retained as employees of the company on the same salary.

Neither Bill nor Ben has used any of their capital gains tax annual exemption for the tax year 2005/06.

Required:

(i) Calculate which of the following means of extracting the ￡180,000 from Flower Limited on 31 March

2006 will result in the highest after tax cash amount for Bill and Ben:

(1) payment of a dividend, or

(2) payment of a salary bonus.

You are not required to consider the corporation tax (CT) implications for Flower Limited in your

answer. (5 marks)

A、应维持1-2年

B、应维持6个月

C、应维持2-3年

D、应维持5年

E、应维持终身

已知类Ben中将二元运算符“/”，重载为友元函数，若c1、c2是Ben的两个对象当使用运算符函数进行显式调用时，与表达式c1/c2等价的表示为______。