IGCSE Accounting Paper-1: Specimen Questions with Answers 331 - 334 of 338

Passage

Gulzar opened a toy car factory on 1 May 2,019. He provided the following information at the end of his first accounting year.

Gulzar Opened a Toy Car Factory on 1 May 2,019
$

Purchases of raw materials

14,000

Direct factory wages

9,800

Indirect factory wages

7,500

Factory insurance

300

General factory expenses

200

Carriage inwards

650

Factory Electricity

900

Stock at 30 April 2,020:

Raw materials

1,000

Work in progress

1,550

Finished goods

2,850

Factory machinery, $ 20,000, was purchased on 1 May 2,019 and is to be depreciated by 10% per annum.

Question 331 (1 of 8 Based on Passage)

Edit

Write in Brief

One Liner▾

Calculate the gross profit ratio showing your workings (Marks 2)

Explanation

Question 332 (2 of 8 Based on Passage)

Write in Short

Short Answer▾

Prepare the manufacturing account for the year ended 30 April 2,020. (Marks 10)

Gulzar

Manufacturing Account for the year ended 30 April 2,020

Manufacturing Account for the Year Ended 30 April 2,020
$

$

Explanation

Gulzar

Manufacturing Account for the year ended 30 April 2,020

Manufacturing Account for the Year Ended 30 April 2,020
$

$

Cost of materials used-

Purchases of materials

14,000

Carriage Inwards

650

14,650

Less: Closing stock of raw materials

1,000

13,650

Direct Factory Wages

9,800

Prime Cost

23,450

Factory Overheads-

Indirect Factory Wages

7,500

General Factory Expenses

200

Factory Electricity

900

Factory Insurance

300

Depreciation on Factory Machinery

2,000

10,900

34,350

Less: Closing Work in Progress

1,550

Cost of Production

32,800

Depreciation on Factory Machinery =

The cost of production was much higher than Gulzar expected.

Question 333 (3 of 8 Based on Passage)

Edit

Write in Brief

One Liner▾

Calculate the Net Profit Ratio. (Marks 2)

Explanation

Question 334 (4 of 8 Based on Passage)

Edit

Write in Short

Short Answer▾

Suggest two ways in which Gulzar’s cost of production can be reduced (Marks 2)

Explanation

The raw materials’ cost is very high due to which the cost of production is higher. The cost of production can be reduced by switching to cheaper raw materials and by availing heavy discounts through bulk purchase. The direct wages should also be reduced to minimize the cost.

Gulzar also provided the following additional information.

Gulzar Also Provided the Following Additional Information
$

Sales

35,750

Cost of Goods sold

27,500

Administration and selling expenses

3,750

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