IGCSE Accounting Paper-1: Specimen Questions with Answers 331 - 333 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.
$ | ||
Purchases of raw materials | 14000 | |
Direct factory wages | 9800 | |
Indirect factory wages | 7500 | |
Factory insurance | 300 | |
General factory expenses | 200 | |
Carriage inwards | 650 | |
Factory Electricity | 900 | |
Stock at 30 April 2020: | ||
Raw materials | 1000 | |
Work in progress | 1550 | |
Finished goods | 2850 |
Factory machinery, $20000, was purchased on 1 May 2019 and is to be depreciated by 10 % per annum.
Question number: 331 (1 of 8 Based on Passage) Show Passage
Write in Brief
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.
Question number: 332 (2 of 8 Based on Passage) Show Passage
Write in Short
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 number: 333 (3 of 8 Based on Passage) Show Passage
Write in Brief
Define and give one example of each of the following types of inventory. (Marks 2)
(I) Raw materials
Explanation
Raw Materials are inputs which are used to manufacture other things by further processing them. These form part of finished goods
In the manufacturing plastic toy car, plastic granules is a raw material.