AQA A-level ACCOUNTING Paper 2 Accounting for analysis and decision-making JUNE 2023

AQA A-level ACCOUNTING Paper 2 Accounting for analysis and decision-making Tuesday 6 June 2023 Morning Time allowed: 3 hours Materials For this paper you must have: • a calculator. Instructions • Use black ink or black ball-point pen. • Fill in the boxes at the top of this page. • Answer all questions. • You must answer the questions in the spaces provided. Do not write outside the box around each page or on blank pages. • If you need extra space for your answer(s), use the lined pages at the end of this book. Write the question number against your answer(s). • Do all rough work in this answer book. Cross through any work you do not want to be marked. Information • The marks for each question are shown in brackets. • The maximum mark for this paper is 120. *jun* IB/G/Jun23/E13 7127/2 Section A Answer all questions in this section. box Only one answer per question is allowed. For each question completely fill in the circle alongside the appropriate answer. CORRECT METHOD WRONG METHODS If you want to change your answer you must cross out your original answer as shown. If you wish to return to an answer previously crossed out, ring the answer you now wish to select as shown. Which is the source document for a payment by direct debit? [1 mark] A Bank statement B Cash receipt C Cheque counterfoil D Purchase invoice Which is the formula for markup? [1 mark] Cost of sales A Gross profit × 100 B Gross profit Cost of sales C Gross profit Revenue × 100 × 100 Revenue D Gross profit × 100 0 3 Which is a benefit of marginal costing? [1 mark] A It helps to apportion fixed costs accurately. B It helps to cover fixed costs fully. C It helps to maximise profits when resources are scarce. D It helps to minimise variable costs. 0 4 A business has the following budgeted information: Direct labour 2 240 hours £15 680 Product M uses direct material at a cost of £11.72 per unit and 30 minutes of labour. Overheads are absorbed on a direct labour hours basis at a cost of £11.80 per hour. What is the standard cost of manufacturing one Product M? [1 mark] A £15.22 B £21.12 C £27.02 D £30.52 Turn over for the next question Turn over ► 0 5 Which is the formula for dividend yield? [1 mark] A Dividend per share Market price per share × 100 B Market price per share Dividend per share × 100 C Ordinary share dividends paid Profit after interest and tax × 100 D Profit after interest and tax Ordinary share dividends paid × 100 Product W has a budgeted materials cost of £578 per unit based on a monthly budgeted production of 4 920 units. For the month of April 2023, actual production was 5 110 units and the following variances were calculated: Variance £ Material price 48 710 Favourable Material usage 56 630 Adverse What is the actual total cost for materials for April 2023? [1 mark] A £2 835 840 B £2 851 680 C £2 945 660 D £2 961 500 0 7 The draft accounts of a sole trader were prepared for the year ended 30 April 2023. The closing balance for the bank was £6 370 debit, and the draft profit for the year was £126 300. On 5 May 2023, it was discovered that a cheque from a credit customer for £490 had not been entered in the accounts. The cheque is in full and final settlement of an invoice totalling £535. What are the adjusted balances? [1 mark] A Bank £5 880 and profit for the year £126 255 B Bank £5 880 and profit for the year £126 345 C Bank £6 860 and profit for the year £126 255 D Bank £6 860 and profit for the year £126 345 A manufacturer provides the following information: May June Budgeted sales (in units) 5 300 5 400 Opening inventory (in units) 1 325 1 350 For each unit of production, 5 kg of material is needed. What is the budgeted purchases of material for May? [1 mark] A 26 375 kg B 26 500 kg C 26 625 kg D 27 000 kg Turn over ► The following information is provided by Bee Ltd for February 2023: Budgeted Actual Production overheads £507 000 £510 500 Machine hours 253 500 hours 258 375 hours Bee Ltd absorbs overheads using machine hours. What is the over- or under-absorption of overheads for February 2023? [1 mark] box A £3 500 over absorbed B £3 500 under absorbed C £6 250 over absorbed D £6 250 under absorbed 1 0 The following information is available for corporation tax for a company for the year ended 31 March 2023. £ Taxation owed at 1 April 2022 18 670 Payments via bank 23 840 Taxation charge entry on the income statement 24 530 What is the balance brought down on the corporation tax account at 1 April 2023? [1 mark] A £17 980 Credit B £17 980 Debit C £19 360 Credit D £19 360 Debit Explain one advantage of a sole trader in a growing business becoming a private limited company. box [3 marks] Turn over for the next question *07* Turn over ► box Product A Product B Material costs £7 400 £6 800 Labour costs £2 750 £3 250 Production (units) 3 000 2 500 Number of units per batch 150 250 Number of purchase orders 10 15 Calculate the total monthly production cost of Product A. [7 marks] Total monthly production cost of Product A £ Workings box Turn over ► box . Calculate the break-even point in units. [5 marks] . Calculate the margin of safety as a percentage of output if the business makes and sells 4 000 units. box [2 marks] . Calculate the profit or loss made if the business makes and sells 2 800 units. [3 marks] Turn over for the next section Turn over ► Section B Answer all questions in this section. box Bev plans to start trading as a sole trader on 1 January 2024 as a wholesaler of ceramic plant pots. She needs to prepare budgeted financial statements and has provided the following estimated financial information: 1. Revenue for the year is expected to be £60 000. All sales will be made on credit, and trade receivables are expected to pay their accounts one month after the sale is made. 2. Purchases for the year are expected to be £24 000. All purchases will be made on credit, and trade payables are expected to be paid one month after the purchase is made. 3. Revenue and purchases are expected to occur equally across the year. 4. Closing inventory is expected to have a value of £3 800. 5. Rent for the warehouse is expected to be £1 300 per month and will be paid one month in arrears. 6. Other costs per year are expected to be: a. administration and marketing £2 400 b. wages £18 700. 7. Bev will purchase a delivery van for £12 000. She will depreciate the van on a reducing balance basis at 30% per year. She will also purchase some equipment for the warehouse for £9 800. She will depreciate the equipment on a straight line basis for 4 years. The equipment is expected to have a scrap value of £1 800. A full year’s depreciation will be charged in the year of purchase for all assets. 8. Bev will invest £7 200 capital from her own savings and expects to make drawings of £1 600 across the year. 9. A 6% bank loan for £15 000 over 5 years will be taken out on 1 January 2024. Monthly repayments will be made across the period of the loan. Interest will be charged on the balance outstanding at the start of the year. 10. The bank has also agreed an overdraft facility of £5 000. . Prepare a budgeted income statement for the year ended 31 December 2024 for Bev. [6 marks] box Turn over ► . Prepare a budgeted statement of financial position as at 31 December 2024 for Bev using the bank balance as the balancing figure. box [8 marks] . Bev has experience in a wholesale environment but she does not have financial experience. She knows that the UK ceramic pot industry can be quite unpredictable because clay suppliers are mostly based in Europe. Assess the usefulness of preparing a budgeted statement of financial position for Bev. [6 marks] box Turn over ► ABD Manufacturing Ltd is considering investing in a new machine and has provided the following information: £ Cost of machine 30 000 Installation costs 2 000 Fixed costs per year (excluding depreciation) 3 000 Purchase and installation of the machine is expected in 2023 and the project will start manufacturing in 2024. The machine will be used for 4 years before disposal at the end of 2027 for an estimated £15 000. The company depreciates all non-current assets on a straight line basis. box 2024 2025 2026 2027 Sales (units) based on customer surveys 1 500 10% increase 10% increase 20% increase Sales price per unit £9.50 £9.50 £9.80 £10.00 Variable costs per unit £2.50 £2.50 £3.00 £3.00 The percentage increase is based on the previous year’s sales in units. ABD Manufacturing Ltd uses a cost of capital of 12%. The relevant discount factors are: Year Discount factor 0 1.000 1 0.893 2 0.797 3 0.712 4 0.636 . Calculate the Net Present Value of the project, clearly showing the cash inflows and outflows. Round all figures to the nearest pound. box [12 marks] *17* Turn ov