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BS1209 Introduction to Financial and Management Accounting (PRD2 A 2025/26)

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Whiskin Ltd acquires a new machine on 30th June 2024 for a price of £175,500 in cash. The accounting year-end for Drysdale Ltd is on 31st December 2024. The machine has no residual value and an estimated economic life of 5 years. The company uses the straight line depreciation method. On 31st December 2024, Whiskin Ltd sells the machine for £170,000 in cash.

Which of the answers below correctly shows all the journal entries related to these economic transactions for Library Ltd in year to 31st December 2024?

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Bunhill Ltd acquires a new machine on 1st January 2024 for a price of £165,000 in cash. The accounting year-end for Library Ltd is on 31st December 2024. The machine has a residual value of £16,000 and an estimated economic life of 10 years. The company uses the straight line depreciation method. On 31st December 2024, Bunhill Ltd sells the machine for £156,000 in cash.

Which of the answers below correctly shows all the journal accounting entries related to these economic transactions for Library Ltd in year to 31st December 2024?

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Library Ltd. has the following account balances on 31st December 2024 (The accounting year-end).

Which of the following statements is correct?

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On 30th September 2024 Carlos Ltd. declares dividends of £98,000. On 1st November 2024 the company pays 20% of the declared dividends. Considering all the journal entries related to these transactions, which of the following statements is true?

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On 30th June 2024 Charles Ltd. declares dividends of £68,000. On 1st August 2024 the company pays 30% of the declared dividends. Considering all the journal entries related to these transactions, which of the following statements is true?

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A manufacturing firm is preparing its monthly income statement using full (absorption) costing. Which of the following costs would be treated as a PERIOD cost (i.e., expensed in the period and not included in product cost calculation)?

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A workshop has only 3,000 direct labour hours available next month due to staff shortages. Demand is effectively unlimited.

The workshop can produce Product A or Product B with the following contribution and labour requirements:

• Product A: contribution £8 per unit; 2 labour hours per unit

• Product B: contribution £9 per unit; 3 labour hours per unit

To maximise profit, which product should be prioritised given labour hours are the limiting factor?

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A retailer sells a product for £25 per unit and incurs variable costs of £15 per unit. Fixed costs are £80,000 per period.

The sales budget for the period is 12,000 units.

What is the margin of safety (MOS) as a percentage of the budgeted sales volume?

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A manufacturer produces a single product and prepares internal reports under both Marginal (variable) costing method and Full (absorption) costing method.

Data for the month:

• Selling price: £40 per unit

• Variable production cost: £22 per unit

• Budgeted fixed production overhead: £90,000 per month

• Normal activity level used to set the OAR: 10,000 units per month

• Actual fixed production overhead incurred: £90,000

• Fixed non-production costs: £30,000 per month

Operational data: Production 11,000 units; Sales 10,000 units; No opening inventory.

Which pair of monthly profits is correct?

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A company manufactures a single product and reports profits under both marginal and Full (absorption) costing.

Data for the month:

• Selling price: £55 per unit

• Variable production cost: £32 per unit

• Budgeted fixed production overhead: £160,000 per month

• Normal activity level used to set the OAR: 20,000 units per month

• Actual fixed production overhead incurred: £170,000

• Fixed non-production costs: £60,000 per month

Operational data: Production 22,000 units; Sales 19,000 units; No opening inventory.

Which pair of monthly profits is correct?

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