Accounting 9706 · AS & A Level · Preparation of financial statements
Preparation of financial statements — practice question
JH Limited is a manufacturing business that makes one product. The transfer price of finished goods to the income statement equals cost plus a fixed percentage for factory profit.
(a)[4]
Explain why a manufacturing business may include a manufacturing account in its financial statements.
(b)[5]
Prepare the manufacturing account for the year ended 31 October 2017 in full detail.
(c)[9]
Prepare the income statement for the year ended 31 October 2017 in full.
(d)[7]
Advise the directors whether they should increase the transfer price or not. Support your answer with any relevant calculations.
Worked solution & mark scheme
This 25-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Enables management to evaluate how well the factory is performing.” …