Cambridge A Level Accounting 9706 — 2022 Oct/Nov Paper 3 · Variant 3

[Turn over * 3 6 3 0 5 5 9 6 3 6 * DC (NF) 302487/3 © UCLES 2022 This document has 20 pages. Any blank pages are indicated. ACCOUNTING 9706/33 Paper 3 Structured Questions October/November 2022 3 hours You must answer on the question paper. You will need: Insert (enclosed) INSTRUCTIONS ● Answer all questions. ● Use a black or dark blue pen. ● Write your name, centre number and candidate number in the boxes at the top of the page. ● Write your answer to each question in the space provided. ● Do not use an erasable pen or correction fluid. ● Do not write on any bar codes. ● You may use an HB pencil for any diagrams, graphs or rough working. ● You may use a calculator. ● International accounting terms and formats should be used as appropriate. ● You should show your workings. INFORMATION ● The total mark for this paper is 150. ● The number of marks for each question or part question is shown in brackets [ ]. ● The insert contains all of the required information and questions. Cambridge International AS & A Level

2 9706/33/O/N/22 © UCLES 2022 Section A: Financial Accounting Answer all questions. 1 Read Source A1 in the insert. (a) Prepare the correct: (i) income and expenditure account … … … … … … … … … … … Workings: [12]

3 9706/33/O/N/22 © UCLES 2022 [Turn over (ii) statement of financial position, clearly disclosing the surplus or deficit for the year. … … … … … … … … … … … … … … … … … … … … [7]

4 9706/33/O/N/22 © UCLES 2022 (b) Advise the managing committee whether or not they should introduce a policy of cancelling the membership of members whose subscriptions are overdue by more than one month. Justify your answer. … … … … … … … … [3] Additional information Some clubs offer life membership. (c) Outline the method of accounting for life membership subscriptions and state the accounting concept which is being applied. Method: … … … … Accounting concept: … [3] [Total: 25]

5 9706/33/O/N/22 © UCLES 2022 [Turn over 2 Read Source A2 in the insert. (a) State when an intangible asset can be recognised in accordance with IAS 38. … … … … [2] Additional information All three companies had ordinary share capital of $400 000. It is the policy of the companies to charge a full year’s amortisation (depreciation) on any intangible asset. Information relating to one ordinary share was as follows: Par value Market price $ $ AB plc 1.00 1.20 CD plc 0.50 1.08 EF plc 0.80 2.35 (b) Calculate for each company: (i) the earnings per share to the nearest whole cent Workings Earnings per share AB plc CD plc EF plc [10]

6 9706/33/O/N/22 © UCLES 2022 (ii) the price earnings ratio to two decimal places. Price earnings ratio AB plc CD plc EF plc [3] Additional information Simon is considering investing in one of the three companies. (c) Name two other ratios of these companies which Simon might wish to consider. 1 … 2 … [2]

7 9706/33/O/N/22 © UCLES 2022 [Turn over (d) Advise Simon which company he should invest in. Justify your answer. … … … … … … … … … … [4] Additional information The directors’ report of AB plc stated that the development costs had enabled the company to drastically reduce its greenhouse gas emissions. (e) Explain how this information might affect potential investors. … … … … … … [2] (f) State two other matters which might be covered in the directors’ report of AB plc. 1 … … 2 … … [2] [Total: 25]

8 9706/33/O/N/22 © UCLES 2022 3 Read Source A3 in the insert. (a) Suggest two reasons why the merger made possible the savings in administrative expenses. 1 … … 2 … … [2] (b) Prepare the forecast income statement for the partnership for the year ending 30 June 2023. … … … … … … … … … … … … … … … … … … … … … [8]

9 9706/33/O/N/22 © UCLES 2022 [Turn over Additional information The partners expect that in the year ending 30 June 2023 they will make drawings as follows: $ Alan 19 800 Doreen 17 200 The partners decided to maintain fluctuating capital accounts. (c) Prepare the partners’ forecast capital accounts for the year ending 30 June 2023. … … … … … … … … Workings: [10]

10 9706/33/O/N/22 © UCLES 2022 (d) State two advantages of a partnership maintaining fixed capital accounts and current accounts. 1 … … 2 … … [2] (e) Advise Doreen whether or not merging her business with Alan’s business is a good strategy. Justify your answer. … … … … … … [3] [Total: 25]

11 9706/33/O/N/22 © UCLES 2022 [Turn over PLEASE TURN OVER

12 9706/33/O/N/22 © UCLES 2022 4 Read Source A4 in the insert. (a) State three reasons why a business prepares a statement of cash flows. 1 … … 2 … … 3 … … [3] (b) Prepare the statement of cash flows for XY plc for the year ended 31 December 2021 in accordance with IAS 7. Use the space provided to show your workings. Workings:

13 9706/33/O/N/22 © UCLES 2022 [Turn over … … … … … … … … … … … … … … … … … … … … … … … … … … … [22] [Total: 25]

14 9706/33/O/N/22 © UCLES 2022 Section B: Cost and Management Accounting Answer all questions. 5 Read Source B1 in the insert. (a) Calculate, for month 2, the following: (i) sales volume variance … … … … [2] (ii) material price variance … … … … [2] (iii) material usage variance … … … … [2] (iv) labour rate variance … … … … [2] (v) labour efficiency variance. … … … … [2]

15 9706/33/O/N/22 © UCLES 2022 [Turn over (b) Discuss the change between month 1 and month 2 for each of the following variances. Suggest one reason for the change. (i) material price variance … … … … … [2] (ii) material usage variance … … … … … [2] (iii) labour rate variance … … … … … [2] (iv) labour efficiency variance … … … … … [2]

16 9706/33/O/N/22 © UCLES 2022 Additional information Tommy so far has only calculated variances for sales, direct material and direct labour. His brother has suggested that in future Tommy should extend his variance analysis to fixed overheads. (c) Advise Tommy whether or not he should also start to calculate fixed overhead variances. Justify your answer. … … … … … … … … … … [5] (d) State two reasons why setting standard costs might be useful, other than for variance analysis. 1 … … 2 … … [2] [Total: 25]

17 9706/33/O/N/22 © UCLES 2022 [Turn over 6 Read Source B2 in the insert. (a) State the term used to describe the factor which causes a change in the cost of an activity. … [1] (b) Complete the table to calculate the total profit made in the month by each of Product A and Product B. Apportion the administration and distribution costs on the basis of the number of units sold. Product A $ Product B $ Sales value Direct material Direct labour Machine set-ups Quality inspections Administration and distribution Profit Workings: [11]

18 9706/33/O/N/22 © UCLES 2022 (c) Calculate the total profit made in the month by each of Product A and Product B if the administration and distribution costs are apportioned on the basis of sales value. Start your calculation with your answer from (b). … … … … … … … … … [6]

19 9706/33/O/N/22 © UCLES 2022 (d) Suggest two different bases which LT plc could use to apportion administration and distribution costs, other than sales units and sales value. 1 … 2 … [2] Additional information The directors are also considering changing their pricing strategy so that a fixed mark-up on total cost is applied to both products. (e) Advise the directors whether or not a fixed mark-up on total cost should be applied. Justify your answer. … … … … … … … … … … … … … … … … [5] [Total: 25]

20 9706/33/O/N/22 © UCLES 2022 Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will be pleased to make amends at the earliest possible opportunity. To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at www.cambridgeinternational.org after the live examination series. Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge. BLANK PAGE

This document consists of 17 printed pages. © UCLES 2022 [Turn over Cambridge International AS & A Level ACCOUNTING 9706/33 Paper 3 Structured Questions October/November 2022 MARK SCHEME Maximum Mark: 150 Published This mark scheme is published as an aid to teachers and candidates, to indicate the requirements of the examination. It shows the basis on which Examiners were instructed to award marks. It does not indicate the details of the discussions that took place at an Examiners’ meeting before marking began, which would have considered the acceptability of alternative answers. Mark schemes should be read in conjunction with the question paper and the Principal Examiner Report for Teachers. Cambridge International will not enter into discussions about these mark schemes. Cambridge International is publishing the mark schemes for the October/November 2022 series for most Cambridge IGCSE™, Cambridge International A and AS Level components and some Cambridge O Level components.

9706/33 Cambridge International AS & A Level – Mark Scheme PUBLISHED October/November 2022 © UCLES 2022 Page 2 of 17 Generic Marking Principles These general marking principles must be applied by all examiners when marking candidate answers. They should be applied alongside the specific content of the mark scheme or generic level descriptors for a question. Each question paper and mark scheme will also comply with these marking principles. GENERIC MARKING PRINCIPLE 1: Marks must be awarded in line with: • the specific content of the mark scheme or the generic level descriptors for the question • the specific skills defined in the mark scheme or in the generic level descriptors for the question • the standard of response required by a candidate as exemplified by the standardisation scripts. GENERIC MARKING PRINCIPLE 2: Marks awarded are always whole marks (not half marks, or other fractions). GENERIC MARKING PRINCIPLE 3: Marks must be awarded positively: • marks are awarded for correct/valid answers, as defined in the mark scheme. However, credit is given for valid answers which go beyond the scope of the syllabus and mark scheme, referring to your Team Leader as appropriate • marks are awarded when candidates clearly demonstrate what they know and can do • marks are not deducted for errors • marks are not deducted for omissions • answers should only be judged on the quality of spelling, punctuation and grammar when these features are specifically assessed by the question as indicated by the mark scheme. The meaning, however, should be unambiguous. GENERIC MARKING PRINCIPLE 4: Rules must be applied consistently, e.g. in situations where candidates have not followed instructions or in the application of generic level descriptors.

9706/33 Cambridge International AS & A Level – Mark Scheme PUBLISHED October/November 2022 © UCLES 2022 Page 3 of 17 GENERIC MARKING PRINCIPLE 5: Marks should be awarded using the full range of marks defined in the mark scheme for the question (however; the use of the full mark range may be limited according to the quality of the candidate responses seen). GENERIC MARKING PRINCIPLE 6: Marks awarded are based solely on the requirements as defined in the mark scheme. Marks should not be awarded with grade thresholds or grade descriptors in mind.

9706/33 Cambridge International AS & A Level – Mark Scheme PUBLISHED October/November 2022 © UCLES 2022 Page 4 of 17 Social Science-Specific Marking Principles (for point-based marking) 1 Components using point-based marking: • Point marking is often used to reward knowledge, understanding and application of skills. We give credit where the candidate’s answer shows relevant knowledge, understanding and application of skills in answering the question. We do not give credit where the answer shows confusion. From this it follows that we: a DO credit answers which are worded differently from the mark scheme if they clearly convey the same meaning (unless the mark scheme requires a specific term) b DO credit alternative answers/examples which are not written in the mark scheme if they are correct c DO credit answers where candidates give more than one correct answer in one prompt/numbered/scaffolded space where extended writing is required rather than list-type answers. For example, questions that require n reasons (e.g. State two reasons …). d DO NOT credit answers simply for using a ‘key term’ unless that is all that is required. (Check for evidence it is understood and not used wrongly.) e DO NOT credit answers which are obviously self-contradicting or trying to cover all possibilities f DO NOT give further credit for what is effectively repetition of a correct point already credited unless the language itself is being tested. This applies equally to ‘mirror statements’ (i.e. polluted/not polluted). g DO NOT require spellings to be correct, unless this is part of the test. However spellings of syllabus terms must allow for clear and unambiguous separation from other syllabus terms with which they may be confused (e.g. Corrasion/Corrosion) 2 Presentation of mark scheme: • Slashes (/) or the word ‘or’ separate alternative ways of making the same point. • Semi colons (;) bullet points (•) or figures in brackets (1) separate different points. • Content in the answer column in brackets is for examiner information/context to clarify the marking but is not required to earn the mark (except Accounting syllabuses where they indicate negative numbers).

9706/33 Cambridge International AS & A Level – Mark Scheme PUBLISHED October/November 2022 © UCLES 2022 Page 5 of 17 3 Calculation questions: • The mark scheme will show the steps in the most likely correct method(s), the mark for each step, the correct answer(s) and the mark for each answer • If working/explanation is considered essential for full credit, this will be indicated in the question paper and in the mark scheme. In all other instances, the correct answer to a calculation should be given full credit, even if no supporting working is shown. • Where the candidate uses a valid method which is not covered by the mark scheme, award equivalent marks for reaching equivalent stages. • Where an answer makes use of a candidate’s own incorrect figure from previous working, the ‘own figure rule’ applies: full marks will be given if a correct and complete method is used. Further guidance will be included in the mark scheme where necessary and any exceptions to this general principle will be noted. 4 Annotation: • For point marking, ticks can be used to indicate correct answers and crosses can be used to indicate wrong answers. There is no direct relationship between ticks and marks. Ticks have no defined meaning for levels of response marking. • For levels of response marking, the level awarded should be annotated on the script. • Other annotations will be used by examiners as agreed during standardisation, and the meaning will be understood by all examiners who marked that paper.

9706/33 Cambridge International AS & A Level – Mark Scheme PUBLISHED October/November 2022 © UCLES 2022 Page 6 of 17 ANNOTATIONS The following annotations are used in marking this paper and should be used by examiners. Annotation Use or meaning  Correct and relevant point made in answering the question. × Incorrect point or error made. LNK Two statements are linked. REP Repeat A An extraneous figure N0 No working shown AE Attempts evaluation R1 Required item 1 R2 Required item 2 OF Own figure EVAL Evaluation NAQ Not answered question BOD Benefit of the doubt given. SEEN Noted but no credit given Highlight Highlight Off page Comment Off page comment

9706/33 Cambridge International AS & A Level – Mark Scheme PUBLISHED October/November 2022 © UCLES 2022 Page 7 of 17 Question Answer Marks 1(a)(i) GHY Club Income and expenditure account for the year ended 31 December 2021 $ $ Subscriptions W1 9 400 (4) Profit (1) from sales of refreshments W2 425 (4) 9 825 Rent 6 000 Other operating costs 1 440 Irrecoverable debts 150 (1) Depreciation (7600+2600) – 9100 1 100 (1) 8690 Surplus 1135 (1)OF W1 9 200 + (400 – 300) (1) +150 (1) +(200 – 250) (1) = 9 400 (1)OF W2 810 + (95 -60) (1) + (80 – 170) (1) = 755 1 180 (1) – 755 = 425 (1)OF 12

9706/33 Cambridge International AS & A Level – Mark Scheme PUBLISHED October/November 2022 © UCLES 2022 Page 8 of 17 Question Answer Marks 1(a)(ii) Statement of financial position at 31 December 2021 $ $ Non-current assets Fixtures at valuation 9 100 Current assets Inventory 170 (1) Subscriptions in arrears 200 (1) 370 Total assets 9 470 Accumulated fund at 1 January 2021 7 940 Surplus for the year 1 135 (1)OF Accumulated fund at 31 December 2021 9 075 (1)OF Current liabilities Owing to suppliers 95 (1) Subscriptions in advance 250 (1) Bank overdraft 50 (1) 395 Total fund and liabilities 9 470 7 1(b) Funds should be received earlier. (1) Irrecoverable debts should be avoided. (1) Some members would have paid later and their subscriptions would be lost. (1) Accept other valid points Decision (1) Max. (2) for comments 3 1(c) Life membership receipts are credited to a life membership fund (1) and released to the income and expenditure account over a number of years (1) Accruals concept (1) 3

9706/33 Cambridge International AS & A Level – Mark Scheme PUBLISHED October/November 2022 © UCLES 2022 Page 9 of 17 Question Answer Marks 2(a) When it is probable that future economic benefits will flow from the asset to the company (1) When the cost of the asset can be reliably measured (1). 2 2(b)(i) Earnings per share AB plc ( ) ( ) 200000 80000 30 400000 − = 1 1 cents or $0.30 (1)OF CD plc ( ) ( ) ( ) 200000 30000 2500 800000 − − 1 1 1 = 21 cents or $0.21 (1)OF EF plc ( ) ( ) 200000 4000 500000 − 1 1 = 39 cents or $0.39 (1)OF 10 2(b)(ii) Price earnings ratio AB plc 1.20 4.00 0.30 = (1)OF CD plc 1.08 5.14 0.21 = (1)OF EF plc 2.35 6.03 0.39 = (1)OF 3 2(c) any two ratios for (1) each, e.g. dividend yield, dividend cover, dividend per share, return on capital employed. 2

9706/33 Cambridge International AS & A Level – Mark Scheme PUBLISHED October/November 2022 © UCLES 2022 Page 10 of 17 Question Answer Marks 2(d) AB has the lowest profit for the year while EF has the highest (1). CD has the lowest earnings per share, largely because the share capital is denominated in shares with a smaller par value (1). AB has the lowest price earnings ratio meaning that investors have the least confidence in the future performance of the company (1). Accept other valid points Decision (1) Max (3) for comments 4 2(e) This might earn the company a reputation for being a forward thinking/responsible/admirable business (1). This might encourage customers to develop a brand preference for AB plc (1). This could increase future profits and/or dividends (1). A good reputation might cause the market value of the shares to rise meaning that investors make a capital gain (1). Accept other valid points Max (2) 2 2(f) Review of the year’s performance (1) Anticipated future progress of the business (1) Events after the date of the statement of financial position with a material effect on the business (1) Names of the directors with their responsibilities and interest in the company (1) Dividends (1) Donations made by the company (1) Policy on the employment of disabled people (1) Employee representation (1) Accept other valid points Max (2) 2

9706/33 Cambridge International AS & A Level – Mark Scheme PUBLISHED October/November 2022 © UCLES 2022 Page 11 of 17 Question Answer Marks 3(a) Doreen could start selling Alan’s products saving on invoicing (1). Staff requirements may be reduced (1). Economies of scale (1). Savings in office costs (1) Accept other valid points Max (2) 2 3(b) Alan and Doreen Forecast income statement for the year ending 30 June 2023 $ $ Revenue (76 900 + 112 000) 188 900 (1) Inventory of finished goods at 1 July 2022 13 480 * Purchases 58 600 (1) Cost of production 31 110 (1) 103 190 Inventory of finished goods at 30 June 2023 13 290 (1)* both Cost of sales 89 900 Gross profit 99 000 Administrative expenses W1 35 840 (2) Distribution costs (11 200 + 18 600 – 1 680) 28 120 (1) Profit from operations 35 040 Finance costs (1 510 – 640) 870 (1) Profit for the year 34 170 W1 (20 950  0.8) + (21 200  0.9) = 16 760 (1) + 19 080 (1) = 35 840 8

9706/33 Cambridge International AS & A Level – Mark Scheme PUBLISHED October/November 2022 © UCLES 2022 Page 12 of 17 Question Answer Marks 3(c) Capital accounts Alan Doreen Alan Doreen $ $ $ $ Goodwill 32 000 (1) 48 000 (1) Opening balance 142 600 245 230 W1 Drawings 19 800 17 200 (1) Profit 13 668 20 502 (1)OF Bal c/d 104 468 200 532 156 268 265 732 156 268 265 732 W1 EITHER Alan $ Doreen $ Original capital 89 200 (1) 126 230 (1) Revaluation 23 400 (1) 69 000 (1) Goodwill 30 000 (1) 50 000 (1) Revised capital 142 600 245 230 OR Alan $ Doreen $ Non-current assets 122 000 (1) 192 000 (1) Other assets less liabilities (9 400) (1) 3 230 (1) Goodwill 30 000 (1) 50 000 (1) Revised capital 142 600 245 230 10

9706/33 Cambridge International AS & A Level – Mark Scheme PUBLISHED October/November 2022 © UCLES 2022 Page 13 of 17 Question Answer Marks 3(d) The capital accounts identify partners’ permanent investment (1). The current accounts show up when a partner’s drawings exceed the profit share (1). The capital accounts enable interest on capital to be calculated easily (1). They separate revaluation gains from trading profits (1). Accept other valid points Max (2) 2 3(e) Cost savings mean that both partners have an increase in profit (1)OF. Doreen is now a partner in a business with a stronger capital base (1). Doreen has a partner to provide new ideas and possibly help with the workload (1). Alan is taking out more in drawings than his share of profit which may cause problems in the longer run (1). Doreen is no longer in sole charge and disagreements may arise (1). Accept other valid points Decision (1). Max (2) for comments 3 Question Answer Marks 4(a) It may be a regulatory requirement (1) Prepared on a cash basis (1) Shows movement of cash (1) Reconciles profit with cash movement (1) Max (3) Accept other valid answers. 3

9706/33 Cambridge International AS & A Level – Mark Scheme PUBLISHED October/November 2022 © UCLES 2022 Page 14 of 17 Question Answer Marks 4(b) XE plc Statement of cash flows for the year ended 31 December 2021 $ $ Profit from operations (66.5 + 11.2 ) 77 700 (1) Depreciation – motor vehicle 20 800 (1) - fittings 7 100 (1) Loss on disposal W1 1 100 (2) Increase in inventory (9 900) (1) Increase in trade receivables W2 (7 900) (3) Decrease in trade payables W3 (3 000) (3) Cash from operations 85 900 Interest paid (8 600) (1) Net cash from operating activities 77 300 (1)OF Cash flow from investing activities Purchase of fittings (3 700) (1) Proceeds of sale of motor vehicle 17 600 (1) Net cash used in investing activities 13 900 (1)OF Cash flow from financing activities Loan repayment (32 000) (1) Dividends paid (24 000) (1) Net cash from financing activities (56 000) (1)OF Net increase in cash and cash equivalents 35 200 (1)OF Cash and cash equivalents on 31 December 2020 (22 600) Cash and cash equivalents on 31 December 2021 12 600 (1) W1 depreciation on disposal = 53 200 + 20 800 – 66 800 = 7 200 (1) loss on disposal = 25 900 – 17 600 – 7 200 = 1 100 (1of) W2 (710 400 – 5 000) (1) – (701 600 – 4 100) (1) = 7 900 (1of) W3 426 800(1) – (431 700 – 1 900 (1) = (3 000) (1of) 22

9706/33 Cambridge International AS & A Level – Mark Scheme PUBLISHED October/November 2022 © UCLES 2022 Page 15 of 17 Question Answer Marks 5(a) Sales volume 105  (12 500 – 10 000) = 262 500 F (2) Material price 26 250  (12 – 11.9) = 2 625 F (2) Material usage 12  (25 000 – 26 250) = 15 000 A (2) Labour rate 40 000  (11 – 10.6) = 16 000 F (2) Labour efficiency 11  (37 500 – 40 000) = 27 500 A (2) * one mark for amount and one mark for direction 10 5(b) Material price This has improved/gone from adverse to favourable (1). As the business became more established it could negotiate a better deal (1). With the increase in production discounts were available for bulk purchases (1). Material usage This has improved but is still adverse (1). Staff are new and inexperienced which leads to wastage, but their skills are improving (1). Labour rate This has become less favourable (1). Staff have become unionized and now demand higher wages/higher skilled staff (1). Labour efficiency This is much improved but still adverse (1). As they become more used to the job staff are able to work faster, and then can be expected to improve further (1). Per variance – (1) mark for change and max (1) for comments Accept other valid points for comments 8 5(c) It would be time consuming (1). It might only inform Tommy about changes over which he had no control (1). It would enable him to reconcile total actual cost with total standard cost/total actual profit with total standard profit (1). The fixed overhead expenditure variance would show if there had been any cost savings (1). The fixed overhead volume variance would show if fixed overheads had been under or over absorbed because of changes in output (1). Decision (1) and comments max (4) Accept other valid points 5 5(d) Quoting prices for orders (1) Setting budgets (1) Accept other valid points 2

9706/33 Cambridge International AS & A Level – Mark Scheme PUBLISHED October/November 2022 © UCLES 2022 Page 16 of 17 Question Answer Marks 6(a) Cost driver (1) 1 6(b) Product A $ Product B $ Sales value 108 000 105 000 (1) both Direct material (30 000) (36 000) (1) both Direct labour (50 000) (24 000) (1) both Machine set-ups (9 000) (1) (12 000) (1) Quality inspections (5 000) (1) (10 000) (1) Administration and distribution (11 502) (1) (17 253) (1) Profit 2 498 (1)OF 5 747 (1)OF 11 6(c) Product A $ Product B $ Profit from (b) 2 498 5 747 (1OF) both Add back Administration and distribution 11 502 17 253 (1OF) both Less Administration and distribution (14 580) (1) (14 175) (1) Revised profit/(loss) (580) (1)OF 8 825 (1)OF 6

9706/33 Cambridge International AS & A Level – Mark Scheme PUBLISHED October/November 2022 © UCLES 2022 Page 17 of 17 Question Answer Marks 6(d) Any two reasonable answers for (1) each, e.g. Number of orders processed and shipped for each product. Number of staff employed for each product. 2 6(e) It would ensure the profitability of the business (1) as it would not be possible for a product to make a loss as appears in part (c) (1) and would ensure consistency across products (1). It would be impossible to apply when there is still disagreement as to how to apportion costs (1) and as the basis of apportionment may be subjective (1) any loss which the directors seek to eliminate may not be realistic (1). Additional analysis may first be needed to establish the most suitable cost drivers (1). Since the business is able to sell all its production at present, it may be better not to increase the existing selling prices (1) as demand may fall (1). It would be useful to consider what competitors are charging for their products (1). How would the directors decide on a rate? (1) Decision (1) and comments max (4) Accept other valid points 5