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.
| $ | ||
| 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 335 (5 of 8 Based on Passage)
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.
| $ | |
| Sales | 35750 |
| Cost of Goods sold | 27500 |
| Administration and selling expenses | 3750 |
Question 336 (6 of 8 Based on Passage)
Write in Brief
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)
Write in Brief
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.