MARK SCHEME for the May/June 2010 question paper for the guidance of teachers 9706 ACCOUNTING

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Baldwin Marsh
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1 UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS GCE Advanced Subsidiary Level and GCE Advanced Level MARK SCHEME for the May/June 200 question paper for the guidance of teachers 9706 ACCOUNTING 9706/22 Paper 22 (Structured Questions (Core)), maximum raw mark 90 This mark scheme is published as an aid to teachers and candidates, to indicate the requirements of the examination. It shows the basis on which Examiners were instructed to award marks. It does not indicate the details of the discussions that took place at an Examiners meeting before marking began, which would have considered the acceptability of alternative answers. Mark schemes must be read in conjunction with the question papers and the report on the examination. CIE will not enter into discussions or correspondence in connection with these mark schemes. CIE is publishing the mark schemes for the May/June 200 question papers for most IGCSE, GCE Advanced Level and Advanced Subsidiary Level syllabuses and some Ordinary Level syllabuses.

2 Page 2 Mark Scheme: Teachers version Syllabus Paper (a) Manufacturing Account for the year ended 30 April 200 Raw materials Stock at May Purchases Stock at 30 April Cost of raw materials consumed 2590 Manufacturing wages 520 Prime cost 30 Factory overheads Factory expenses 432 Factory depreciation Work in progress Stock at May Stock at 30 April Factory cost of production 4260 [8] (b) Income Statement (Trading and Profit and Loss Account) for year ended 30 April 200 Sales 5684 Stock of finished goods at May Cost of production Inventory (stock) of finished goods at 30 April Gross profit 384 Reduction in provision for doubtful debts 6 Income from rent Depreciation 238 Bank charges 2 Bank interest 38 Office expenses 348 Salaries 222 Sales expenses 248 Bad debt written off 4 20 [] Net profit 38

3 Page 3 Mark Scheme: Teachers version Syllabus Paper (c) Balance Sheet at 30 April 200 $000 Cost Deprec NBV Non-current (fixed) assets Factory Office Current assets Inventories (stocks) Raw materials 202 Finished goods 252 Work in progress Trade receivables 466 prov for d debts Current Liabilities Trade payables 426 Bank Capital at May Net profit 38 [] 656 [Total: 30]

4 Page 4 Mark Scheme: Teachers version Syllabus Paper 2 Data Non-current (fixed) assets Machinery Motor Vehicles Cost May Additions during year Less disposals during year Cost 30 April Depreciation balance at May Add charge for year Less on disposals for year Depreciation balance at 30 April Percentage depreciation Machinery Motor vehicles % 25% (a) (i) Disposal accounts Machinery Cost 400 Depn 4 years 60 Cash 200 Loss Vehicles (item 2) Cost 400 Depn 3 years 300 Profit 20 Part exch Vehicles (item 3) Cost 360 Depn year 90 Bank 20 Loss [2] DOES NOT NEED TO BE IN THE FORM OF ACCOUNTS (ii) Non-current (fixed) asset schedule Machinery Motor Vehicles Cost at May Additions during year Less disposals during year Cost at 30 April Depreciation at May Add charge for year Less on disposals during year [8]

5 Page 5 Mark Scheme: Teachers version Syllabus Paper (b) (i) Wear and tear 2 Obsolescence 3 Time 4 Depletion No marks for methods. Any three correct for (3) [3] (ii) Machinery, vehicles 2 Computers, any technological equipment 3 Lease 4 Quarry, oil well etc. Any three correct for (3) [3] (c) Cost or Market value 2 Useful life 3 Residual value at end of useful life 4 Expected length of ownership 5 Rate of usage 6 Method of depreciation 7 Type of asset 8 Machine hours Any correct 4 for (4) [Total: 30]

6 Page 6 Mark Scheme: Teachers version Syllabus Paper 3 (a) (i) The break-even point is the level of activity at which the business makes neither a profit nor a loss i.e. total contribution = total fixed costs. (accept a relevant formula) [2] (ii) The margin of safety is the distance between the break-even point and the expected level of activity. It is the amount by which actual activity can fall short of expected activity before a loss is incurred. [2] DATA Sales Variable costs Fixed costs Sales - variable costs (b) Sales % Fixed costs (c) c/s ratio $ [3] (d) (Fixed costs + profit) c/s ratio ( ) 35 $ (e) 35 Sales c/s ratio - fixed costs ( ) $4250 OR ( ) $4250

7 Page 7 Mark Scheme: Teachers version Syllabus Paper (f) Revised contribution = sales - 5% - variable costs $ revised contribution Revised c/s ratio = new sales $ % Fixed costs + profit c/s ratio = ( ) $ Accept answers between $ and $ answer depends on number of decimal places revised c/s ratio is taken to. [] ALTERNATIVE METHODS ACCEPTABLE THROUGHOUT [Total: 30]

MARK SCHEME for the May/June 2010 question paper for the guidance of teachers 9706 ACCOUNTING

UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS GCE Advanced Subsidiary Level and GCE Advanced Level MARK SCHEME for the May/June 2010 question paper for the guidance of teachers 9706 ACCOUNTING 9706/21