Cambridge International AS & A Level * 3 3 4 1 4 9 4 9 7 0 * ACCOUNTING 9706/43 Paper 4 Cost and Management Accounting October/November 2023 1 hour 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. ● You should present all accounting statements in good style. ● You should show your workings. INFORMATION ● The total mark for this paper is 50. ● The number of marks for each question or part question is shown in brackets [ ]. ● The insert contains all of the sources referred to in the questions. This document has 12 pages. Any blank pages are indicated. DC (PQ) 312057/2 © UCLES 2023 [Turn over

Cambridge International AS & A Level
* 3 3 4 1 4 9 4 9 7 0 *
ACCOUNTING 9706/43
Paper 4 Cost and Management Accounting October/November 2023
1 hour
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.
● You should present all accounting statements in good style.
● You should show your workings.
INFORMATION
● The total mark for this paper is 50.
● The number of marks for each question or part question is shown in brackets [ ].
● The insert contains all of the sources referred to in the questions.
This document has 12 pages. Any blank pages are indicated.
DC (PQ) 312057/2
© UCLES 2023 [Turn over

2 1 Read Source A in the insert. (a) Prepare the flexible budget statement for the month of April. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ............................................................................................................................................. [3] (b) Calculate the following variances: (i) sales price ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ..................................................................................................................................... [2] (ii) sales volume (as a measure of change in profit) ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ..................................................................................................................................... [2] (iii) fixed overhead expenditure ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ..................................................................................................................................... [2] © UCLES 2023 9706/43/O/N/23

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1 Read Source A in the insert.
(a) Prepare the flexible budget statement for the month of April.
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(b) Calculate the following variances:
(i) sales price
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(ii) sales volume (as a measure of change in profit)
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(iii) fixed overhead expenditure
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3 (iv) fixed overhead volume. ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ..................................................................................................................................... [2] (c) Prepare a statement to reconcile the flexible budgeted profit as calculated in (a) with the actual profit. Your statement should start with the flexible budgeted profit. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ............................................................................................................................................. [7] [Turn over © UCLES 2023 9706/43/O/N/23

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(iv) fixed overhead volume.
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(c) Prepare a statement to reconcile the flexible budgeted profit as calculated in (a) with the
actual profit. Your statement should start with the flexible budgeted profit.
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© UCLES 2023 9706/43/O/N/23 [Turn over

4 Additional information An analysis of direct material variance shows that both the material price and material usage have an adverse variance. The directors of T Limited are considering changing the existing supplier. They have two potential suppliers to consider. Local supplier A Overseas supplier B Usage per unit after wastage 2.8 kilos 2.5 kilos Purchase price per kilo quoted by supplier $13.75 $15.40 (d) Advise the directors which supplier they should choose. Justify your answer and support it with relevant calculations. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ............................................................................................................................................. [7] [Total: 25] © UCLES 2023 9706/43/O/N/23

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Additional information
An analysis of direct material variance shows that both the material price and material usage have
an adverse variance. The directors of T Limited are considering changing the existing supplier.
They have two potential suppliers to consider.
Local supplier A Overseas supplier B
Usage per unit after wastage 2.8 kilos 2.5 kilos
Purchase price per kilo quoted by supplier $13.75 $15.40
(d) Advise the directors which supplier they should choose. Justify your answer and support it
with relevant calculations.
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5 2 Read Source B in the insert. (a) Prepare a statement showing the net cash flow for each year from Year 0 to Year 3 for: (i) model IM3 ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ..................................................................................................................................... [5] [Turn over © UCLES 2023 9706/43/O/N/23

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2 Read Source B in the insert.
(a) Prepare a statement showing the net cash flow for each year from Year 0 to Year 3 for:
(i) model IM3
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6 (ii) model IM8. ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ..................................................................................................................................... [4] © UCLES 2023 9706/43/O/N/23

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(ii) model IM8.
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© UCLES 2023 9706/43/O/N/23

7 Additional information W Limited uses a cost of capital of 12%. The relevant discount factors are as follows: year discount factor 1 0.893 2 0.797 3 0.712 (b) State two advantages of using the net present value (NPV) method for investment appraisal. 1 ................................................................................................................................................ ................................................................................................................................................... 2 ................................................................................................................................................ ................................................................................................................................................... [2] (c) Calculate the NPV for each model of machine. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ............................................................................................................................................. [4] [Turn over © UCLES 2023 9706/43/O/N/23

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Additional information
W Limited uses a cost of capital of 12%. The relevant discount factors are as follows:
year discount factor
1 0.893
2 0.797
3 0.712
(b) State two advantages of using the net present value (NPV) method for investment appraisal.
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(c) Calculate the NPV for each model of machine.
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© UCLES 2023 9706/43/O/N/23 [Turn over

8 (d) Advise the directors which model W Limited should choose. Justify your answer. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ............................................................................................................................................. [7] © UCLES 2023 9706/43/O/N/23

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(d) Advise the directors which model W Limited should choose. Justify your answer.
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© UCLES 2023 9706/43/O/N/23

9 Additional information If an additional improvement cost of $5000 were incurred at the end of Year 1, the production capacity of IM3 could be increased to 18 000 units. (e) Calculate the change in NPV of IM3 if the additional cost is incurred. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ............................................................................................................................................. [3] [Total: 25] © UCLES 2023 9706/43/O/N/23

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Additional information
If an additional improvement cost of $5000 were incurred at the end of Year 1, the production
capacity of IM3 could be increased to 18 000 units.
(e) Calculate the change in NPV of IM3 if the additional cost is incurred.
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[Total: 25]
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© UCLES 2023 9706/43/O/N/23

12 BLANK PAGE 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. © UCLES 2023 9706/43/O/N/23

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BLANK PAGE
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.
© UCLES 2023 9706/43/O/N/23

9706_w23_qp_43