IGCSE Accounting Paper-1: Specimen Questions with Answers 331 - 333 of 338

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Passage

Gulzar opened a toy car factory on 1 May 2019. He provided the following information at the end of his first accounting year.

Gulzar Opened a Toy Car Factory on 1 May 2019
$
Purchases of raw materials14000
Direct factory wages9800
Indirect factory wages7500
Factory insurance300
General factory expenses200
Carriage inwards650
Factory Electricity900
Stock at 30 April 2020:
Raw materials1000
Work in progress1550
Finished goods2850

Factory machinery, $ 20000, was purchased on 1 May 2019 and is to be depreciated by 10 % per annum.

Question 331 (1 of 8 Based on Passage)

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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
$
Sales35750
Cost of Goods sold27500
Administration and selling expenses3750

Question 332 (2 of 8 Based on Passage)

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Short Answer▾

Suggest two ways in which the above two ratios can be improved. (Marks 2)

Explanation

  • Selling Price per unit can be increased to increase sales revenue so as to improve both Gross Profit Ratio as well as Net Profit Ratio.
  • Further, Net Profit Ratio is much lesser than the Gross Profit Ratio because of high administration and selling expenses.
  • Administration and selling expenses can be controlled to improve the Net Profit Ratio.

Question 333 (3 of 8 Based on Passage)

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One Liner▾

Calculate the Net Profit Ratio. (Marks 2)

Explanation

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