IGCSE Accounting Paper-1: Specimen Questions with Answers 334 - 335 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 2019Gulzar opened a toy car factory on 1 May 2019

$

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: 334 (4 of 8 Based on Passage) Show Passage

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Short Answer Question▾

Write in Short

Prepare the manufacturing account for the year ended 30 April 2020. (Marks 10)

Gulzar

Manufacturing Account for the year ended 30 April 2020

Manufacturing Account for the year ended 30 April 2020Manufacturing Account for the year ended 30 April 2020

$

$

Explanation

Gulzar

Manufacturing Account for the year ended 30 April 2020

Manufacturing Account for the year ended 30 April 2020Manufacturing Account for the year ended 30 April 2020

$

$

Cost of materials used-

Purchases of materials

14000

Carriage Inwards

650

14650

Less: Closing stock of raw materials

1000

13650

Direct Factory Wages

9800

Prime Cost

23450

Factory Overheads-

Indirect Factory Wages

7500

General Factory Expenses

200

Factory Electricity

900

Factory Insurance

300

Depreciation on Factory Machinery

2000

10900

34350

Less: Closing Work in Progress

1550

Cost of Production

32800

Depreciation on Factory Machinery =

The cost of production was much higher than Gulzar expected.

Question number: 335 (5 of 8 Based on Passage) Show Passage

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Short Answer Question▾

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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 informationGulzar also provided the following additional information

$

Sales

35750

Cost of Goods sold

27500

Administration and selling expenses

3750

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