9706 Accounting: MARK SCHEME For The May/June 2014 Series
9706 Accounting: MARK SCHEME For The May/June 2014 Series
9706 Accounting: MARK SCHEME For The May/June 2014 Series
9706 ACCOUNTING
9706/22 Paper 2 (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 should be read in conjunction with the question paper and the Principal Examiner
Report for Teachers.
Cambridge will not enter into discussions about these mark schemes.
Cambridge is publishing the mark schemes for the May/June 2014 series for most IGCSE, GCE
Advanced Level and Advanced Subsidiary Level components and some Ordinary Level components.
Page 2 Mark Scheme Syllabus Paper
GCE AS/A LEVEL – May/June 2014 9706 22
(d) Charles Altas’s Income Statement for the year ended 31 December 2013
$ $ $
Revenue (169 492 (1of) + 30 000 (1) + 29 000 (1)) 228 492
less sales returns 4 200 (1)
224 292
less cost of sales
Inventory at 1 January 2013 29 600 (1)
Purchases 165 120 (1of)
less returns 4 500 (1) 160 620
190 220
2 (a) Dr Cr
$ $
(i) Equipment 14 000 (1)
Arcadia Limited 14 000 (1) [2]
(b) (i) It is used to record the double entry (1) of non-routine transactions (1) [2]
(c) (i) Award 1 mark (max) for a correct example; prudence, matching or consistency [1]
(ii) Straight line depreciation is easy to calculate (1) and therefore there is less chance of
errors (1) whereas reducing (diminishing) balance depreciation is more complex.
As equipment gets older maintenance costs increase (1) and with reducing (diminishing)
balance method depreciation will decrease (1) therefore ensuring a more even charge
(1) over the life of the asset.
[Total: 30]
3 (a) $
Direct materials 90 000 (1)
Direct labour 67 500 (1)
Variable production overhead 45 000 (1)
Marginal cost of 15 000 units 202 500
Alternative answer
(b) $
Direct materials 90 000 (1)
Direct labour 67 500 (1)
Variable production overhead 45 000 (1)
Fixed production overhead 60 000 (1)
Absorption cost of 15 000 units 262 500
Alternative answer
(c) $
Revenue – 13 000 × $26 338 000 (1)
Variable cost of sales – 13 000 × $13.50 (175 500) (1of)
Contribution 162 500 (1of)
Fixed production overhead (60 000) (1)
Other fixed overheads (25 000) (1)
Profit 77 500 (1of) [6]
(d) $
Revenue – 13 000 × $26 338 000 (1)
Cost of sales – 13 000 × £17.50 (227 500) (1of)
Gross profit 110 500 (1of)
Other fixed overheads (25 000) (1)
Profit 85 500 (1of) [5]
(e) $
Marginal cost profit 77 500
Inventory (1) – 2 000 units @ $4 per unit (1) 8 000
Absorption cost profit 85 500 [2]
(f) In the marginal cost statement, inventory is valued at variable cost (1) resulting in a higher
cost of sales (1) and fixed costs are treated as a period cost (1).
In the absorption cost statement, the inventory value includes an element of fixed overhead
(1) resulting in a lower cost of sales (1). Some of the fixed overheads are carried forward to
the next accounting period (1).
(g) The marginal cost of producing one unit of Esprit will reduce (1) resulting in an increase in
contribution (1). The profit for the year will stay the same (1) because fixed production
overheads will increase (1). [4]
[Total: 30]