Account Unit 2 Paper 3

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TEST CODE O22OIO32MAY/JI-INE 2OO9ORM TP 2009134

CARIBBEAN EXAMINATIONS COUNCILADVANCED PROFIC IENCY EXAMI¡{ATIOI{

ACCOUNTING

UNIT2 _ PAPERO3/2

tj nours

05 JUNE 2009 (a.m.)

This paper comprises NINE questions. AnswerALL questions.

Begin EACH answer on a separate page.

Silent non-programmable calculators may be used, but ALL necessary working shouldclearlv shown.

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Copyright @ 2009 Caribbean Examinations Council @

All rights reserved.02201032/CAPE|2009



4.

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Questions 4 and 5 refer to the following job cost sheet of Edwards Company.

Job Cost Sheet

Job Number 49

Bird cages

Quantity

Date Requested

Date Completed

200

Item

For

Julv 02.2008

Talparo Company July 31,2008

DateJuty 2008

Directmaterials

Direct labour

Manufacturingoverhead

S

10t215

222427

3l

825900

600500

440380

540

572494

702

Cost of completed job:

Direct materials

Direct labour

Manufacturing overhead

Total cost

Unit cost

List the source documents for the direct materials and direct labour costs that are assisnedto this job. [ 2 marks]

Calculate the predetermined manufacturing overhead rate and indicate how this rate was

(a)

(b)determined. [ 2 marks]

5. Usingtheinformationpresentedabove andyouranswers to Question4, determinethe TOTAL costand the unit cost of the completed job. [ 4 marks]

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6. Sunflower Manufacturing Company produces high-quality furniture on a job order basis. InMarch, production consisted of only two jobs, Jobs 65 and 66. These jobs were started and

completèd during the month. Manufacturing overhead was applied at a rate of 8 per direct labourhour.

The following cost data were recorded for the month:

Job 65 Job 66

Direct materials 20 125 16 050Direct labourcost 44 000 19 600

Hours 6000 2700Selling price 193 163 597 250

Actual manufacturing overhead for the month totalled S68 700.

(a) Calculate the amount by which the manufacturing overhead cost was over-applied orunder-applied during the month. [ 2 marks]

(b) Compute the gross profit for Job 65. [ 4 marks]

7. (a) Define the term 'standard costs.' [ 2 marks]

(b) State ONE condition under which previously established standard costs could be revised.

Include an appropriate example for the condition stated. [ 2 marks]

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8. Listed below are EIGHT technical accounting terms that are associated with the evaluation oflong-term investment projects.

(a) Annuity

(b) Average annual net income(c) Capital budgeting(d) Discounting(e) Internal rate ofreturn(Ð Paybackperiod(g) Present value

(h) Return on average investment

Each ofthe following statements defines ONE of these technical terms. List the EIGHT technicalaccounting terms and match EACH with its definition by indicating the correct number (1-8) ofthe matching statement. Each definition should be used only once.

l. The process of analysing investments in plant assets

2. The number ofyears required to recover the entire cost of an investment from its net cashflows

3. A stream of equal cash flows to be received or paid

4. The estimated average annual income of an investment expressed as a percentage of itsinitial cost

5. The numerator in the return on average investment computation6. The amount an investor should be willing to pay today for the right to receive a specified

amount of cash at a specified future date

7. The process of computing the present value of future cash flows

8. The rate of return that equates a project's cash inflows to its cash outflows

I I marks]

g. List TWO factors that should be taken into consideration when assessing the adequacy of the rateof return of a capital investment proposal. [ 2 marks]

END OF TEST

0220t032/cAPE/2009

Account Unit 2 Paper 3

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