A-LEVEL ACCOUNTING. ACCN4 Further Aspects of Management Accounting Report on the Examination June Version: 1.0

Transcription

1 A-LEVEL ACCOUNTING ACCN4 Further Aspects of Management Accounting Report on the Examination 2120 June 2016 Version: 1.0

2 Further copies of this Report are available from aqa.org.uk Copyright 2016 AQA and its licensors. All rights reserved. AQA retains the copyright on all its publications. However, registered schools/colleges for AQA are permitted to copy material from this booklet for their own internal use, with the following important exception: AQA cannot give permission to schools/colleges to photocopy any material that is acknowledged to a third party even for internal use within the centre.

3 Overview Whilst this examination paper gave students ample opportunity to demonstrate knowledge and understanding of the whole syllabus, performance was often affected by a lack of understanding and precision in completing computational questions. The standard of communication, particularly in the final question showed a marked improvement on previous examinations. Question 1 The first question required students to prepare a manufacturing account from given data and to show their understanding of the treatment of the provision for unrealised profit. (a) Well-prepared students were able to gain very good marks in the preparation of the manufacturing account. Most students were able to correctly calculate the cost of raw materials used, but a common error was to include the factory supervisors wages as part of prime costs. It was pleasing to note that most students correctly labelled prime cost and the production cost of finished goods. However, many students did not correctly calculate the factory profit to add on to the production cost of finished goods to calculate the transfer price. Less well prepared students often failed to include any figure for the factory profit whatsoever. (b) Students were required to calculate the amount of the provision for unrealised profit to be included in the balance sheet. Whilst this was generally very well done by the majority of students, some had difficulty with the basic maths and used a figure of 20% rather than the fraction 20/120. Question 2 This question concentrated on the areas of activity based costing and marginal costing. (a) Students were required to explain the terms cost pool and cost driver. In the vast majority of cases, responses were very basic; for example, a cost driver drives costs, showing a lack of depth of knowledge on this subject area. When asked to explain, one short sentence will only rarely justify two marks. (b) Stating an example of a cost pool and an associated cost driver only emphasised the general lack of understanding of activity based costing. Many students gave incorrect cost pools such as rent or depreciation and therefore gained no marks. (c) Stating three advantages of operating a system of activity based costing resulted in very mixed responses. One or two word answers were frequent and inadequate. For example, decision making, accuracy, needed development to gain marks. In isolation, these terms are meaningless. (d) The three multiple choice questions relating to the breakeven chart were generally either all correct or all incorrect. 3 of 5

4 Question 3 This question focussed on marginal costing and ultimately the benefits of standard costing. (a) Calculation of the budgeted contribution and budgeted profit from a given data set showed that students generally understood the principles of marginal costing. However, failure to read the question carefully resulted in many students preparing the annual figures rather than the monthly figures requested. As a result, three marks were lost. Some students failed to explicitly label the contribution and profit and as such were not rewarded. (b) Calculation of the actual contribution and actual profit was much more successful, once again emphasising the fact that the principles were understood, but carelessness in reading the question resulted in lost marks. (c) I repeat verbatim the same message as in previous reports. The calculation of material and labour variances was generally well done. Most students appear to have been taught variance analysis based on formulae and unfortunately, many were unable to recall the exact correct formula, in particular for the material usage variance and the labour efficiency variance. I do recommend a more simplistic approach to variance analysis. For example when calculating the material usage variance, the difference between the actual quantity used and the standard quantity for the actual production valued at the standard cost tends to be easier for students to understand and remember. This principle can be applied to all variances and does not involve memorising formulae. A number of students were penalised through a failure to correctly label any of the variances they had calculated. (d) Calculation of the sales price variance was generally well done by most students. (e) Students were required to reconcile the budgeted profit to the actual profit using the data from the earlier parts of the question. Generally this was well answered with students being aware of the need to use their own figures, though some recalculated the budgeted and/or the actual profit and were penalised accordingly. Others did not appear to understand the principles involved despite the fact that the necessary labels were provided in the question. (f) The final part of this question required students to demonstrate their understanding of standard costing by stating four benefits of maintaining such a system. As with other questions of a discursive nature, this was often very poorly answered with many students failing to offer precise or cohesive answers. 4 of 5

5 Question 4 (a) Students were required to calculate the net cash savings of purchasing a machine using given data. Many students failed to understand the requirements of the task and produced extensive, though often incorrect, workings. Well prepared students achieved full marks, though many failed to deduct the non-cash element of depreciation and were penalised one mark as a result. (b) Calculation of the payback based on students own figures from part (a) was generally completed to a better standard with many demonstrating the correct technique. (c) Calculation of the net present value of the machine again relied totally on the students own figures from part (a), but surprisingly was not particularly well answered. Many students failed to account for the residual value of the machine at the end of its useful life. (d) Finally, students were required to demonstrate their evaluation skills in offering advice to the directors. Most students were well prepared for a question of this nature and there were some excellent answers warranting very high marks. Weaker students failed to develop the issues they identified sufficiently and there were also a number of generic responses not related to the given scenario. These were not rewarded. Conclusion As commented on in previous reports, it was very pleasing to note that throughout the paper, the standard of communication was generally of a higher standard than previous papers though often lacking sufficient development. The most disappointing factor was the poor standard of presentation of the computational questions. Mark Ranges and Award of Grades Grade boundaries and cumulative percentage grades are available on the Results Statistics page of the AQA Website. Converting Marks into UMS marks Convert raw marks into Uniform Mark Scale (UMS) marks by using the link below. UMS conversion calculator 5 of 5