IGCSE Accounting Mark Scheme

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This report will provide insight on what your management team should do concerning production costs. We will examine 2 different scenarios and provide our decision as to which makes most sense. In the first scenario, the total fixed cost of the production is 1,000,000. In the second

1- The total unit cost = Total Variable Cost + Production Fixed Expenses + Advertising Expense + Selling and Administrative Expense = 3.23 + 1.20 + 0.30 + 0.19 = 4.92.

1. For financial accounting purposes, what is the total amount of product costs incurred to make 10,000 units?

2. What is the total cost? How much of the total cost are labor costs? Capital costs?

INCLUDES SOLUTIONS INCLUDES MARKERS’ REPORTS This is a three (3) hour paper. You have ten (10) minutes reading time. There are seven (7) questions. There are eight (8) pages, including this one. You must answer all parts of all questions. The questions are not of equal value. All answers must be written in blue or black ink. Show all relevant working.

#1. Common-Sized Balance Sheets. Just for FEET, Inc. Balance Sheet Years ending Jan 31st 1997 18.40% 0.00% 3.53% 45.97% 1.50% 69.40% 21.08% 8.05% 1.46% 100.00% 20.22% 11.41% 2.07% 0.30% 0.72% 34.73% 5.48% 40.21% 0.00% 48.76% 11.03% 59.79%

OPERATING EXPENSES 57500 Freight 4,302,951.46 1.79% 4,236,263.09 1.84% (66,688.37) -1.55% 60000 Advertising Expense 897,140.01 0.37% 986,854.01 0.43% 89,714.00 10.00% 61000 Auto Expenses 208,974.39 0.09% 214,502.80 0.09% 5,528.41 2.65% 62000 Research & Development 31,212,334.17 12.97% 543,870.44 0.09% (30,668,463.73) -98.26% 64000 Depreciation Expense 133,000.00 0.06% 446,000.00 0.19% 313,000.00 235.34% 64500 Warehouse Salaries

Item 7.|  |MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS|  | |25|  |

‘Cash and cash equivalents’ include certain short-term investments and, in some cases, bank overdrafts. Like IFRS, ‘cash and cash equivalents’ include certain shortterm investments, although not necessarily the same short-term investments as under IFRS. Unlike IFRS, bank overdrafts are considered a form of short-term financing, with changes therein classified as financing activities. The statement of cash flows presents cash flows during the period, classified by operating, investing and financing activities. Like IFRS, the statement of cash flows presents cash flows during the period, classified by operating, investing and financing activities. The separate components of a single transaction are classified as operating, investing or financing. Unlike IFRS, cash receipts and payments with attributes of more than one class of cash flows are classified based on the predominant source of the cash flows unless the underlying transaction is accounted for as having different components. Cash flows from operating activities may be presented using either the direct method or the indirect method. If the direct method is used, then an entity presents a reconciliation of profit or loss to net cash flows from operating activities; however, in our experience practice varies regarding the measure of profit or loss used. Like IFRS, cash flows from operating activities may be presented using either the direct method or the indirect method. Like IFRS, if

The wages of general production employees who are idled due to machine breakdown are classified as indirect costs. Direct costs are usually variable and change as production volumes change. Thus, direct materials and direct labor are typically variable costs. For special orders, some direct costs can be fixed, however. The costs (depreciation, electricity, and routine maintenance) associated with a machine dedicated to one product are direct costs of that product. Indirect costs cannot be easily and conveniently assigned to a special order. Rather, these costs are common costs, in that they are incurred to produce a variety of special orders. Maintenance costs of general purpose equipment, the supervisor’s salary, and utilities are direct costs needed to produce special orders in general, but are indirect costs for a particular special order. Moreover, general production costs, including property taxes, insurance, lawn care, cafeteria costs, and miscellaneous supplies consumed in production are indirect costs properly allocated to special orders manufactured.

Warehouse Club, Supermarket and Consumer Products firm. Remaining financial statements are B, E & H.

Manufacturing overhead Rent on production equipment........ $ 6,000 Insurance on factory building ....... 1,500 Depreciation on factory building............................................ 1,500 Utility costs—factory........................ 900 Property taxes on factory building............................................ 400 Miscellaneous expenses— factory .............................................. 1,000 Total manufacturing costs..................... Total cost of work in process ...............

This case study is located in the Assignment Section of your Blackboard.  You are to analyze:

The last one is the Balance Sheet which tells a person the lists of assets he has, the list of