three valid points 3 d Responses could include Arguments for should not

Three valid points 3 d responses could include

This preview shows page 3 - 6 out of 10 pages.

three valid points [3] (d)Responses could include: Arguments for ‘should not continue’ not acceptable for external reporting the % of mark-up is subjective Arguments for ‘should continue’ production department continues to be treated as profit centre facilitates pricing cost of production department is better controlled compare efficiency, reward efficient managers facilitates a system of responsibility accounting Max 2 ×3 marks(1 mark for stating and 2 for development) for justification (max 3 for arguments for should continue max 3 for arguments for should not continue) 1 markfor recommendation [7] [Total: 25]
Background image
Page 4 Mark Scheme Syllabus Paper Cambridge International AS/A Level – March 20169706 32 © Cambridge International Examinations 2016 2 (a) (i)1250 ÷ 50 = $25 (1)[1](ii) (3050 ×1000/100) (1)– 25 000 (1)– 4000 (1)= $1500 (1of)[4] (b) (i)Consignment account $ $ Goods on consignment 25 000(1)Sumit (sales) 54 000(1)Bank (freight) 4 000 (1)Balance c/d 3 050 (1)Sumit (import duties) 1 500 (1of)Sumit (commission) 10 800 (1of)Consignment profit 15 750 (1of)57 050 57 050 Balance b/d 3 050(1of)[8] (ii)Sumit account $ $ Consignment a/c (sales) 54 000 (1)Consignment a/c (import duties) 1 500 (1)ofConsignment a/c (commission) 10 800 (1)ofBank 26 800 (1)Balance c/d 14 900 (1of)54 000 54 000 Balance b/d 14 900 (1of)[6] (c)Chin should make this change (1) of decision This would reduce costs (1)and hence increase profit on consignment (1)by 11 (1)×$160 = $1760 (1of)Increased risk (1)Demand may fall (1)resulting in unsold inventory (1) Finance may be required to buy all the inventory in one go (1)Borrowing may increase during the year (1)There may be an opportunity cost of surplus funds (1)On average radios would stay in inventory much longer (1)with risk of obsolescence (1)or theft/damage (1)Sumit might not be able to organise adequate storage space (1)with inventory holding costs and might require a higher rate of commission to cope with the added responsibility (1)1 mark for decision Max 2 for calculation Max 3 for discussion [6] [Total: 25]
Background image
Page 5 Mark Scheme Syllabus Paper Cambridge International AS/A Level – March 20169706 32 © Cambridge International Examinations 2016 3 (a) Equity and liabilities section of the Statement of financial position at 31 December 2015 $ Equity and liabilities Equity $0.50 ordinary shares 300 000 (1)5% $0.25 Non-redeemable preference shares 25 000 Share premium 150 000 (1)Retained earnings (3 000) (1)Total equity 472 000 Non-current liabilities 100 000 (1)Current liabilities 10 000 (1)Total equity and liabilities 582 000 [5] (b) (i)dividend cover (144 000 – 2000) = 142 000 / 54 000 (1)= 2.63 times (1)(ii)gearing ratio 125 000(1)/ 572 000 ×100 = 21.85% (1)of(iii)return on capital employed 192 000 / 572 000(1)of×100 = 33.57% (1)of[6](c)Johnson plc has a higher dividend cover (1), a lower ordinary dividend per share (1)of $0.09 (1)and a lower earnings per share (1)of $0.24 (1)but a lower gearing ratio (1)a higher return on capital employed (1)This means that Johnson plc is not borrowing as much from external sources proportional to the amount of capital employed compared to Samuel plc (1). Samuel has more risk. (1)The capital the company is being used more efficiently as there is a greater return (1)However the ordinary dividends could only be paid out of profits 2.63 times compared to 2.1
Background image
Image of page 6

You've reached the end of your free preview.

Want to read all 10 pages?

  • Fall '08
  • Weeks
  • Balance Sheet, MARK SCHEME, cambridge international examinations, Cambridge International, International AS/A Level

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture