MI 2020 Prelim Paper 2 QP

2020 Preliminary Exams Pre-University 3 PRINCIPLES OF ACCOUNTING 9593/02 Paper 2 21 September 2020 3 hours Additional Materials: Answer Booklet READ THESE INSTRUCTIONS FIRST If you have been given an Answer Booklet, follow the instructions on the front cover of the Booklet. Write your name and class on all the work you hand in. Write in dark blue or black pen on both sides of the paper. Do not use staples, paper clip, glue or correction fluid. You may use a calculator. DO NOT WRITE ON ANY BARCODES Section A and Section B Answer all questions. All calculations must be shown adjacent to the answer. At the end of the examination, fasten all your work securely together. The number of marks is given in brackets [ ] at the end of each question or part question. This document consists of 7 printed pages and 1 blank page [Turn over

2 Section A Answer all questions in this section. 1 Samuel runs a small manufacturing business, making three different products: Jen, Kit and Mat. He provides the following budgeted information for next month: Jen Kit Mat Maximum production and sales (units) 6 000 7 000 8 000 Unit costs: Selling price Raw material at $10 per kilo Direct labour $ 72 30 6 $ 90 40 8 $ 136 60 10 Total fixed costs during the period are $750 000. REQUIRED (a) State two disadvantages of using contribution margin for making business decisions. [2] Additional information Samuel has been advised that, as a result of an industrial action, only 74 000 kilos of raw material will be available next month. He has confirme d orders for next month for 5 000 units of each product. He is considering two options: Option 1 Make as many units of each product such that he can maximise the profit for the month. Option 2 Make a minimum of 5 000 units of each product and use the remaining raw material in the most profitable way. REQUIRED (b) Calculate the maximum profit Samuel can make from each option. (Note: products are to be produced in quantities of thousands). [13] (c) Advise Samuel which option he should choose. Justify your answer by considering both financial and non-financial factors. [5] [Total: 20]

3 2 Cahaya Pte Ltd is a small manufacturing business. The firm has two production cost centres: machining and assembly; and two service cost centres: maintenance and canteen. The company accounts clerk provides you with the following budgeted data for the next financial year: Details Machining Assembly Maintenance Canteen Allocated costs $120 100 $80 050 $40 000 $15 000 Number of employees 10 30 10 Number of maintenance hours 8 000 2 000 Direct labour hours 5 000 15 500 Machine hours 45 000 3 875 REQUIRED (a) Reapp