IGCSE Accounting Paper-1: Specimen Questions with Answers 335 - 337 of 338

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 335 (5 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 336 (6 of 8 Based on Passage)

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One Liner▾

Define and give one example of each of the following types of inventory. (Marks 2)

Finished goods

Explanation

Finished Goods are those which have completed the manufacturing process and are ready to be sold to the consumer.

In plastic toy car manufacturing, finished toy cars are finished goods.

Question 337 (7 of 8 Based on Passage)

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One Liner▾

Define and give one example of each of the following types of inventory. (Marks 2)

Work in progress

Explanation

Work in progress is a semi-finished good. It is good in intermediate stage between raw material and finished goods. It needs some further processing to become finished goods.

In the manufacturing plastic toy car, moulded toy parts (unassembled) are Work in Progress.

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