Accounting 9706/02 May June 2007 | Cambridge AS Level Past Papers With Mark Scheme

1. Manufacturing and trading account preparation: Creation of Aurora’s manufacturing account, allocation of overheads, depreciation of factory machinery, and calculation of trading account transferring finished goods at total factory cost plus a margin.
2. Inventory valuation methods: Calculation of Archie Pelago’s closing stock using FIFO, LIFO, and AVCO methods, and analysis of gross profit impact under each valuation method.
3. Financial ratios and liquidity analysis: Calculation of current ratio and liquid ratio for Archie Pelago’s balance sheets over two years, and comparative analysis of financial status and liquidity between 2006 and 2007.
4. Contribution and profitability analysis: Calculation of contribution per unit and percentage of sales for different refrigerator models manufactured by Fernando, and identification of the break-even point in units and dollars.
5. Loss-making product evaluation: Discussion on why Fernando should continue production of Household and Business refrigerators despite apparent losses, considering contribution margin and fixed cost coverage.
6. Financial performance assessment: Analysis of direct material, labour, variable, and fixed overheads in determining profitability of products, and evaluation of strategies for improving overall financial performance.