Prepared by D.

El-Hoss

Manufacturing
Accounts

www.igcseaccounts.com

All Questions Copyright of Cambridge International Examinations

 Prepared by D. El-Hoss

5 For
Examiner’s
Use
2 (a) Explain why it is necessary for a manufacturing business to prepare a Manufacturing
Account in addition to a Trading and Profit and Loss Account.

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(b) Explain each of the following terms in connection with a manufacturing business.

(i) Cost of materials consumed

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(ii) Prime cost

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(iii) Production cost

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0452/03/O/N/03 [Turn over

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 Prepared by D. El-Hoss

6 For
Examiner’s
Use
(c) The financial year of El Sayed Manufacturing Company ends on 31 August.
The following information is provided.

Stocks At 1 September 2002 At 31 August 2003

$ $
Raw material 7 040 6 220
Work in progress 810 950
Finished goods 5 780 6 100

For the year ended 31 August 2003

$
Sales of finished goods 180 500
Purchases of raw materials 43 820
Wages – factory operatives 40 190
factory supervisors 18 400
office and sales staff 37 000
General expenses – factory 5 340
office 3 600
Rates and insurance 7 500

Additional information –

1. The factory machinery cost $42 000 and the office machinery cost $23 000. In each
case the annual depreciation charge is 20% on cost.

2. The rates and insurance are to be apportioned - factory 4/5 and office 1/5.

3. www.igcseaccounts.com
On 31 August 2003 wages due were – factory operatives $1170
office staff $600.

Extract the necessary information from the above figures and prepare the
Manufacturing Account of El Sayed Manufacturing Company for the year ended 31
August 2003.

0452/03/O/N/03

All Questions Copyright of Cambridge International Examinations

 Prepared by D. El-Hoss

7 For
Examiner’s
Use
El Sayed Manufacturing Company

Manufacturing Account for the year ended 31 August 2003

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0452/03/O/N/03 [Turn over

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 Prepared by D. El-Hoss

6 For
Examiner's
Use
2 Mark Sekota started trading as Red Barn Manufacturing on 1 September 2004. The
business makes wooden barns which are supplied in sections for customers to construct to
their own designs.

Mark Sekota provides the following information:

At 1 September 2006 At 31 August 2007

$ $
Stocks – Raw materials 43 500 37 000
Work in progress 21 400 15 800
Finished goods 142 100 163 500

For the year ended 31 August 2007

$
Sales of finished goods 2 249 400
Purchases of raw materials 576 000
Direct factory wages 473 600
Indirect factory wages 197 600
Factory general expenses 335 500

The factory machinery is being depreciated using the reducing balance method at
20% per annum. The machinery originally cost $250 000 and the accumulated
depreciation at 1 September 2006 was $90 000.

REQUIRED

www.igcseaccounts.com
(a) Explain to Mark Sekota why it is important that his stocks are valued at the lower of
cost and net realisable value.

[2]

© UCLES 2007 0452/03/O/N/07

All Questions Copyright of Cambridge International Examinations

 Prepared by D. El-Hoss

7 For
Examiner's
Use
(b) Prepare the manufacturing account of Red Barn Manufacturing for the year ended
31 August 2007.

Red Barn Manufacturing

Manufacturing Account for the year ended 31 August 2007

www.igcseaccounts.com

[11]

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All Questions Copyright of Cambridge International Examinations
 Prepared by D. El-Hoss

8 For
Examiner's
Use
(c) Prepare the trading account of Red Barn Manufacturing for the year ended
31 August 2007.

Red Barn Manufacturing

Trading Account for the year ended 31 August 2007

[5]

Mark Sekota is concerned that his rate of stock turnover of finished goods is slower than it
was in the previous financial year.

REQUIRED
www.igcseaccounts.com
(d) Using your answer to (c) calculate, correct to two decimal places, the rate of stock
turnover of finished goods. Show your workings.

[2]

(e) State two ways in which the rate of stock turnover of finished goods may be improved.

(i)

(ii)

[2]

[Total: 22]

© UCLES 2007 0452/03/O/N/07

All Questions Copyright of Cambridge International Examinations

 Prepared by D. El-Hoss

14

4 Gideon Yeboah is a manufacturer. He provided the following information. For

Examiner's
Use
At 1 April 2007 At 31 March 2008
$ $
Stock - raw materials 21 230 19 410
work in progress 11 680 12 130
finished goods 46 900 53 170

For the year ended 31 March 2008

$
Sales of finished goods 825 000
Purchases of raw materials 255 620
Purchases of finished goods 13 200
Direct factory wages 194 060
Factory general expenses 133 910

The following additional information is available on 31 March 2008:

1 Direct factory wages accrued amounted to $4800.

2 The factory general expenses include insurance on the factory which is prepaid by
$210.

3 The factory machinery was valued at $92 000.

On 1 April 2007 the factory machinery was valued at $103 000. Additional machinery
costing $21 000 was purchased during the year. There were no sales of machinery
during the year.

www.igcseaccounts.com
REQUIRED

(a) (i) State the basis on which Gideon Yeboah should value his stocks.

[1]

(ii) Name one accounting principle Gideon Yeboah is applying by valuing his stocks
on this basis.

[1]

© UCLES 2008 0452/03/M/J/08

All Questions Copyright of Cambridge International Examinations

 Prepared by D. El-Hoss

15

(b) Prepare the manufacturing account of Gideon Yeboah for the year ended For
31 March 2008. Examiner's
Use

Gideon Yeboah
Manufacturing Account for the year ended 31 March 2008

www.igcseaccounts.com

[11]

© UCLES 2008 0452/03/M/J/08 [Turn over

All Questions Copyright of Cambridge International Examinations
 Prepared by D. El-Hoss

16

(c) Prepare the trading account of Gideon Yeboah for the year ended 31 March 2008. For
Examiner's
Use
Gideon Yeboah
Trading Account for the year ended 31 March 2008

[6]

[Total: 19]
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© UCLES 2008 0452/03/M/J/08

All Questions Copyright of Cambridge International Examinations

 Prepared by D. El-Hoss

2 Ahmed Zaki manufactures office furniture. His financial year ends on 30 April. For
Examiner’s
Use

REQUIRED

(a) Explain why it is necessary for Ahmed Zaki to prepare a manufacturing account at the
end of his financial year.

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(b) During the year ended 30 April 2010 Ahmed Zaki purchased some finished goods from
another manufacturer.

Suggest two reasons why Ahmed Zaki purchased these goods rather than manufacturing
them himself.

1 ......................................................................................................................................

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2 ......................................................................................................................................

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www.igcseaccounts.com
Ahmed Zaki provided the following information:

At 1 May 2009 At 30 April 2010

$ $
Inventory (stock) – raw material 33 400 35 230
Stock – work in progress 14 200 13 900

For the year ended 30 April 2010

$
Purchases of raw materials 408 160
Direct factory wages 325 270
Indirect factory wages 130 200
Factory general expenses 198 280

Additional information on 30 April 2010:

1 Indirect factory wages accrued amounted to $1520.

2 Factory general expenses include prepaid insurance, $400.

3 On 1 May 2009 the factory machinery was valued at $162 000.

Additional machinery costing $19 500 was purchased during the year.
There were no sales of machinery during the year.
On 30 April 2010 the factory machinery was valued at $150 000.

© UCLES 2010 0452/21/M/J/10

All Questions Copyright of Cambridge International Examinations

 Prepared by D. El-Hoss

REQUIRED For
Examiner’s
(c) Prepare the manufacturing account of Ahmed Zaki for the year ended 30 April 2010. Use

Ahmed Zaki
Manufacturing Account for the year ended 30 April 2010

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[Total: 17]

© UCLES 2010 0452/21/M/J/10 [Turn over

All Questions Copyright of Cambridge International Examinations
 Prepared by D. El-Hoss

10

3 Herman Wagner makes furniture. For

Examiner's
Use
He provided the following information for the year ended 30 April 2012

$
Inventories 1 May 2011 – Raw materials 14 300
Finished goods 12 100
Work in progress 6 520
Revenue 600 000
Purchases of raw materials 168 900
Purchases of finished goods 3 450
Carriage on purchases of raw materials 2 600
Wages – Factory direct 193 700
Factory indirect 43 600
Administration 121 100
General expenses – Factory 24 450
Administration 9 640
Factory machinery at cost 98 000
Office equipment at cost 14 500
Provision for depreciation of factory machinery 35 280
Provision for depreciation of office equipment 4 350

www.igcseaccounts.com
Loose tools 1 May 2011 at valuation950

Additional information

1 At 30 April 2012: $
Inventories were valued at
Raw materials 16 400
Finished goods 11 300
Work in progress 6 970

2 The factory general expenses include rates and insurance, $6200, which should
be apportioned – factory ¾ and office ¼.

3 The factory indirect wages include $10 000 taken by Herman Wagner for personal
use.

4 The factory machinery is being depreciated at 20% per annum using the reducing
balance method.
The office equipment is being depreciated by 10% per annum using the straight
line method.

5 During the year additional loose tools, $45, were purchased.

At 30 April 2012 the loose tools were valued at $890.

© UCLES 2012 0452/22/M/J/12

All Questions Copyright of Cambridge International Examinations

 Prepared by D. El-Hoss

11

REQUIRED For
Examiner's
Use
(a) Select the relevant information and prepare the manufacturing account of Herman
Wagner for the year ended 30 April 2012.

Herman Wagner
Manufacturing Account for the year ended 30 April 2012

www.igcseaccounts.com

[16]

© UCLES 2012 0452/22/M/J/12 [Turn over

All Questions Copyright of Cambridge International Examinations
 Prepared by D. El-Hoss

12

(b) Define and give one example of each of the following types of inventory in Herman For
Wagner’s business. Examiner's
Use

(i) Raw materials

[2]

(ii) Work in progress

[2]

(iii) Finished goods

[2]

(c) Explain why Herman Wagner revalues the loose tools at the end of each financial year
rather than using the straight line or reducing balance method of depreciation.
www.igcseaccounts.com

[2]

© UCLES 2012 0452/22/M/J/12

All Questions Copyright of Cambridge International Examinations

 Prepared by D. El-Hoss

13

After the preparation of the manufacturing account for the year ended 30 April 2012, For
Herman Wagner prepared an income statement showing a gross profit of $170 200 and Examiner's
Use
total expenses of $144 000.

On 1 May 2011 Herman Wagner’s capital was $130 000. On that date he borrowed
$20 000 (repayable on 30 April 2016) from Cashco Ltd.

REQUIRED

(d) Calculate the return on capital employed (ROCE) for Herman Wagner.

Use the total capital employed on 1 May 2011.

The calculation should be correct to two decimal places.

Show your workings.

[3]

(e) The return on capital employed (ROCE) calculated on 30 April 2011 was 19.50%.
www.igcseaccounts.com
State and explain whether Herman Wagner will be satisfied with the ratio you
calculated in (d).

Will he be satisfied?

Explanation

[3]

[Total: 30]

© UCLES 2012 0452/22/M/J/12 [Turn over

All Questions Copyright of Cambridge International Examinations
 Prepared by D. El-Hoss

1 Zabeel opened a manufacturing business on 1 November 2011.

The following information was provided at 31 October 2012.

$
Revenue 183 400
Purchases of finished goods 9 200
Purchases of raw materials 54 300
Returns from customers 2 600
Returns to suppliers of raw materials 2 100
Factory direct wages 46 000
Factory indirect wages 11 210
Office and administration wages 23 950
Rates and insurance 6 000
Factory general expenses 21 660
Office and selling expenses 9 400
Carriage on raw materials 480
Carriage on sales 630
Discount allowed 130
Discount received 420

Additional information

1 On 31 October 2012 Inventories were valued at:

raw materials 4 300
work in progress 10 200
finished goods 12 620

www.igcseaccounts.com
2 On 31 October 2012 factory direct wages outstanding amounted to $2150 and factory general
expenses prepaid were $370.

3 60% of the rates and insurance relates to the factory and 40% relates to the office.

4 Machinery costing $64 500 was purchased on 1 November 2011. Depreciation is to be

charged at 20% per annum on cost.

5 Loose tools, $980, were purchased on 1 November 2011. Additional tools, $130, were
purchased during the year. No loose tools were disposed of during the year.
On 31 October 2012 the loose tools were valued at $820.

REQUIRED

(a) Select the relevant figures and prepare the manufacturing account of Zabeel for the year
ended 31 October 2012.

© UCLES 2012 0452/21/O/N/12

All Questions Copyright of Cambridge International Examinations

 Prepared by D. El-Hoss

Zabeel For
Manufacturing account for the year ended 31 October 2012 Examiner's
Use

www.igcseaccounts.com

[14]

© UCLES 2012 0452/21/O/N/12 [Turn over

All Questions Copyright of Cambridge International Examinations
 Prepared by D. El-Hoss

(b) Select the relevant figures and prepare the income statement (trading section) of For
Zabeel showing the calculation of the gross profit for the year ended 31 October 2012. Examiner's
Use

Zabeel
Income Statement for the year ended 31 October 2012

www.igcseaccounts.com [6]

(c) (i) State the basis on which Zabeel should value his inventories.

[1]

(ii) Name the accounting principle Zabeel is applying by valuing the inventories on this
basis.

[1]

(d) Name the accounting principle Zabeel applied in each of the following.

(i) Credit sales were recorded at the time of sale rather than when payment was
received.

[1]

(ii) No entries were made for expenses paid by Zabeel for running his personal motor car.

[1]

[Total: 24]

© UCLES 2012 0452/21/O/N/12

All Questions Copyright of Cambridge International Examinations