CAPE Accounting Unit 2 · 2009 · Paper 2

26 questions and parts from this paper. Open one to see it in full, then practise it on Quelpr and get it marked against the mark scheme.

1. 1(a)5 marksClassify each cost item (2 to 11) as being either a product (inventoriable) cost or a period (non-inventoriable) cost, using the provided table format.
2. 1(b)(i)a)5 marksCalculate ending inventory, cost of goods sold, and gross profit under the First-in-First-out (FIFO) inventory valuation method.
3. 1(b)(i)b)5 marksCalculate ending inventory, cost of goods sold, and gross profit under the Last-in-First-out (LIFO) inventory valuation method.
4. 1(b)(i)c)4 marksCalculate ending inventory, cost of goods sold, and gross profit under the Weighted average inventory valuation method.
5. 1(b)(ii)1 markIndicate which of the valuation methods is the most appropriate if management's goal is to produce the most up-to-date inventory valuation on the Balance Sheet.
6. 1(c)(i)10 marksPrepare a Cost of Goods Manufactured Statement for 2008.
7. 1(c)(ii)5 marksPrepare an Income Statement for 2008.
8. 2(a)(i)a)2 marksDetermine the cost of a single unit of the product under absorption costing.
9. 2(a)(i)b)2 marksDetermine the cost of a single unit of the product under variable costing.
10. 2(a)(ii)8 marksPrepare an Income Statement for August using the contribution format and variable costing.
11. 2(a)(iii)2 marksReconcile the variable costing net income figure computed in (a)(ii) and the absorption costing net income figure provided.
12. 2(a)(iv)2 marksBriefly explain the main difference between variable costing and absorption costing in terms of the treatment of costs in the financial statements.
13. 2(a)(v)2 marksIndicate the primary purposes for which variable costing and absorption costing are used.
14. 2(a)(vi)2 marksExplain why the variable costing income measurement approach would be attractive to a manager who is interested in projecting her firm's future profit performance.
15. 2(b)15 marksPrepare a production report for the mixing department for June 2008.
16. 3(a)(i)7 marksCalculate the total standard cost of materials (including packaging) for a pair of bookends.
17. 3(a)(ii)2 marksList two parties that would typically participate in the development of material standards.
18. 3(a)(iii)1 markFor any one of the parties listed in (a)(ii), indicate their role in the development of material standards.
19. 3(b)(i)5 marksCompute the price and efficiency variances of the materials used in the production of Right Lube.
20. 3(b)(ii)2 marksMaterials were purchased from a new supplier seeking a long-term purchase contract. Recommend whether the company should sign the contract, supporting your response with an appropriate explanation.
21. 3(b)(iii)6 marksCompute the rate and efficiency variances for direct labour employed in the production of Right Lube.
22. 3(b)(iv)2 marksDuring November, the labour mix was changed from 20 senior technicians and 15 assistants to 15 senior technicians and 20 assistants to save costs. Recommend whether this new labour mix should be continued, supporting…
23. 3(c)(i)1 markCalculate the current contribution margin per box of gourmet chocolate.
24. 3(c)(ii)3 marksCompute the current break-even point, in dollars, before the cost increase.
25. 3(c)(iii)4 marksCompute the company's expected net income for next year.
26. 3(c)(iv)2 marksAssuming the cost of chocolate increases by 20 percent, calculate the new selling price required to maintain the current contribution margin rate.