9706_s12_qp_22
A paper of Accounting, 9706
Questions:
3
Year:
2012
Paper:
2
Variant:
2
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1
Bart, a sole trader, provided the following trial balance for the year ended 30 April 2012. $ $ Sales Revenue 799 000 Inventory at 1 May 2011 (at cost) Raw materials 20 000 Work-in-progress 52 000 Finished goods 78 000 Purchase of raw materials 238 000 Purchase returns 10 000 Manufacturing wages 265 000 Indirect factory wages 46 000 Factory buildings at cost 600 000 Factory machinery at cost 260 000 Office equipment at cost 148 000 Provision for depreciation: Factory machinery 60 000 Office equipment 44 000 Insurance 14 000 General factory expenses 6 000 Factory supervision salaries 15 000 Heat and light 6 000 Administrative expenses 33 000 Office salaries 55 000 Trade receivables 40 000 Provision for doubtful debts 2 000 Trade payables 32 000 Bank 3 000 Capital 932 000 1 879 000 1 879 000 . Additional Information: Inventory at 30 April 2012 (at cost): $ Raw materials 56 000 Work-in-progress 58 000 Finished goods 72 000 Depreciation is provided on non-current assets at a rate of 20% per year using the reducing balance method. The following expenses should be apportioned as follows: Factory Office Insurance 70% 30% Heat and light 80% 20% On 30 April 2012 indirect factory wages of $5000 were unpaid and insurance of $7000 had been paid in advance. Provision for doubtful debts is to be maintained at 3% of trade receivables. For Examiner's Use REQUIRED Prepare Bart’s manufacturing account for the year ended 30 April 2012. For Examiner's Use Prepare Bart’s income statement for the year ended 30 April 2012. For Examiner's Use State three examples of how the prudence concept has been applied in the preparation of Bart’s manufacturing account and income statement.
1. Financial accounting (AS Level)  →  1.3. Accounting for non-current assets
1. Financial accounting (AS Level)  →  1.5. Preparation of financial statements
3. Financial accounting (A Level)  →  3.1. Preparation of financial statements
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2
The following statement of financial position of Mhairi, a sole trader, was drawn up at 30 April 2012. Statement of Financial Position at 30 April 2012 $ $ $ Non-current assets Equipment 232 000 Fixtures and fittings 160 000 392 000 Current assets Inventory 86 000 Trade receivables 16 000 102 000 Current liabilities Trade payables 38 000 Bank 14 000 52 000 Net current assets 50 000 442 000 Financed by Capital 400 000 Add Profit for the year 86 000 486 000 Less Drawings 44 000 442 000 . Additional information: On 1 May 2012 Mhairi admitted Aiden as a partner. The profit sharing ratio between Mhairi and Aiden was agreed at 3:2. Aiden agreed to pay a cheque to the partnership for $200 000 and bring in vehicles valued at $94 000 and inventory valued at $26 000. It was agreed that goodwill be valued at 2 times the average net profit earned over the past 4 years. Goodwill is not to be retained in the books. The following figures were available: Year ended 30 April Net sales income $ Net profit percentage % 200 000 400 000 500 000 860 000 For Examiner's Use REQUIRED Calculate the value of the goodwill. Prepare the capital accounts of Mhairi and Aiden after the admission of Aiden as a partner. For Examiner's Use Prepare the statement of financial position of the new partnership at 1 May 2012. For Examiner's Use Outline four advantages to Mhairi of forming a partnership with Aiden.
3. Financial accounting (A Level)  →  3.1. Preparation of financial statements
1. Financial accounting (AS Level)  →  1.5. Preparation of financial statements
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3
Winston Ltd had estimated the following factory indirect costs for its financial year ended 30 April 2012. $ Indirect wages 2 120 000 Repairs and maintenance of machinery 410 000 Rent and rates 53 000 Machinery insurance 24 000 Premises insurance 28 000 Electricity – power 48 000 Depreciation of machinery 14 000 Consumables 21 150 The company calculated a suitable overhead absorption rate for each of its two production departments using the following information. Production departments Service departments Machining Assembly Maintenance Canteen Machine cost ($) 617 500 332 500 – – Direct machine hours 202 500 22 500 – – Direct labour hours 55 500 314 500 – – Floor area (square metres) 9 000 8 000 2 000 1 000 Power usage (%) Number of employees Consumables ($) 9 550 9 800 1 250 The proportion of work done by each service department was: Machining Assembly Maintenance Canteen (%) Maintenance (%) – For Examiner's Use REQUIRED Complete the following table to calculate the total overheads for each production cost centre. Cost Basis Machining Assembly Maintenance Canteen Calculate the appropriate overhead absorption rate for each production department. Machining Assembly For Examiner's Use The actual results for the year ended 30 April 2012 were as follows: Machining Assembly Factory indirect costs ($) 1 410 000 1 312 000 Direct machine hours 195 000 21 000 Direct labour hours 57 000 318 000 REQUIRED Calculate the amount of overhead which would be over or under-absorbed by each production department. Explain how the results in could have occurred. For Examiner's Use Explain the problems associated with using predetermined overhead absorption rates in calculating the price of a product.
2. Cost and management accounting (AS Level)  →  2.2. Traditional costing methods
4. Cost and management accounting (A Level)  →  4.1. Activity based costing (ABC)
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