OxfordAQA A-Level Accounting: Manufacturing accounts (9615) – Practice Questions

These are original questions written for Marlbridge, for revision and practice on this content. They are not reproduced past-paper questions, and they do not replicate the exam’s exact structure, question count or mark tariffs – examination boards hold copyright in their own papers. Use these alongside the official past papers from your board or school.

Every question below tests section 3.2.7, Manufacturing accounts, from the OxfordAQA International AS and A-level Accounting (9615) specification, Version 1.2, for International AS exams May/June 2025 onwards and International A-level exams May/June 2026 onwards. This is International A-level only content, which the assessment overview assigns to Paper 3: Financial Accounting. Every listed outcome is tested. All businesses and figures are invented; amounts are in US dollars.

Before you start, read the study guide or the revision notes. Course links: the OxfordAQA A-level Accounting hub, the printable checklist and the diagnostic quizzes.

Questions

1. Define prime cost and give two examples of costs included in it. [3]

2. Saltrigg Soaps makes bars of soap. State whether each item is a prime cost, a factory overhead or an expense in the income statement: (i) a royalty paid on each bar made; (ii) depreciation of mixing machines; (iii) carriage outwards; (iv) wages of the factory supervisor; (v) wages of machine operators; (vi) commission paid to sales staff. [3]

3. For the year ended 31 May 2026 Saltrigg Soaps had: raw materials at 1 June 2025, 12,600; purchases of raw materials, 97,450; carriage inwards, 2,150; returns outwards, 1,800; raw materials at 31 May 2026, 14,300; direct wages, 71,400; licence fee per bar made, 3,500. Calculate direct materials consumed and prime cost. [4]

4. Saltrigg Soaps’ site has a floor area of 2,000 m², of which the factory uses 1,500 m². Rent of 42,000 and insurance of 9,600 are shared by floor area. Electricity of 15,750 is shared 80% factory, 20% office, from meter readings. Indirect factory wages were 26,700. Calculate total factory overheads. [4]

5. Saltrigg’s prime cost and factory overheads total 249,000. Work in progress was 8,900 at the start of the year and 10,400 at the end. Calculate the factory cost of finished goods. [2]

6. Saltrigg transfers finished goods to its warehouse at factory cost plus 12%. Using 247,500 as the factory cost of finished goods, calculate the profit on manufacture and the transfer value, and state where the profit on manufacture appears in the income statement. [3]

7. Pellowby Brushes transfers goods at factory cost plus 40%. Finished goods at transfer price were 15,400 at the start of the year and 19,600 at the end. Calculate the opening and closing provisions for unrealised profit, state the effect of the change on profit, and give the figure for finished goods in the statement of financial position. [4]

8. Kelderby Rugs opened its factory in the year ended 31 July 2025. Goods leave the factory at a price on which profit on manufacture is 30% of the transfer price. Finished goods at transfer price were 32,000 at 31 July 2025 and 27,500 at 31 July 2026.

(a) Calculate the provision for unrealised profit at each date. [2] (b) Prepare the provision for unrealised profit account for both years. [3]

9. Explain, with reference to two accounting concepts, why a manufacturer must make a provision for unrealised profit. [4]

10. Arkwind Fans Ltd: year ended 30 June 2026.

Item	$
Raw materials: 1 July 2025 / 30 June 2026	23,700 / 26,100
Work in progress: 1 July 2025 / 30 June 2026	14,200 / 12,500
Finished goods at transfer price: 1 July 2025 / 30 June 2026	41,300 / 47,200
Purchases of raw materials	214,600
Carriage inwards	3,800
Direct wages	168,500
Indirect factory wages	48,500
Factory power	21,300
Premises costs (factory 2/3, office 1/3)	54,000
Depreciation: factory machinery / office equipment	28,000 / 6,000
Revenue	780,000
Administrative salaries	72,400
Selling expenses	39,100
Finance costs	6,500
Tax on profit	24,600

Goods are transferred at factory cost plus 18%.

(a) Prepare the manufacturing account. [6] (b) Prepare the income statement down to profit for the year after tax, with profit from operations shown separately. [5] (c) Calculate the total inventories in the statement of financial position at 30 June 2026. [1]

11. Wrenfold Lamps made 16,000 lamps last year at a factory cost of finished goods of 344,000. An outside supplier will sell identical lamps for 24.00 each, and Wrenfold transfers goods at this market value. The factory premises are leased at 30,000 a year for four more years; this cost would continue if the factory closed. Every other factory cost would stop. The owner is thinking of closing the factory and buying in.

(a) Calculate the factory cost per lamp and the profit on manufacture. [3] (b) Evaluate whether Wrenfold should close the factory. [7]

Answers

1. Prime cost is the total of the direct costs of production, those traced to each unit made [1]. Examples: direct materials consumed [1]; direct labour, such as wages of machine operators, or direct expenses such as royalties per unit [1]. [3] Examiner insight: “Costs of making the product” is too vague; the key word is direct, so say the cost can be traced to each unit.

2. Prime cost: (i) and (v) [1]. Factory overhead: (ii) and (iv) [1]. Income statement: (iii) and (vi) [1]. [3] Examiner insight: A supervisor works in the factory but makes no product directly, so the wages are an overhead, not direct labour.

3. Direct materials consumed = 12,600 + 97,450 + 2,150 − 1,800 − 14,300 [1] = 96,100 [1]. Prime cost = 96,100 + 71,400 + 3,500 [1] = 171,000 [1]. [4] Examiner insight: Carriage inwards adds to the cost of materials; leaving it out, or deducting it, gives a wrong materials figure and a wrong prime cost.

4. Rent 42,000 × 1,500/2,000 = 31,500 [1]; insurance 9,600 × 1,500/2,000 = 7,200 [1]; electricity 15,750 × 80% = 12,600 [1]. Total = 31,500 + 7,200 + 12,600 + 26,700 = 78,000 [1]. [4] Examiner insight: Show each apportionment as a calculation, so a slip in one line does not hide correct working elsewhere.

5. 249,000 + 8,900 − 10,400 [1] = 247,500 [1]. [2] Examiner insight: Opening work in progress is added because it is finished this year; reversing the signs is a common slip worth checking.

6. Profit on manufacture = 247,500 × 12% = 29,700 [1]. Transfer value = 247,500 + 29,700 = 277,200 [1]. The profit on manufacture is added to gross profit, after any adjustment for the change in the provision for unrealised profit [1]. [3] Examiner insight: Apply the mark-up to the factory cost of finished goods, after the work in progress adjustment, not to prime cost.

7. Opening PUP = 15,400 × 40/140 = 4,400 [1]. Closing PUP = 19,600 × 40/140 = 5,600 [1]. The provision rises by 1,200, which is deducted from profit on manufacture, so profit falls by 1,200 [1]. Finished goods = 19,600 − 5,600 = 14,000 [1]. [4] Examiner insight: 40% of 19,600 (7,840) treats the mark-up as if it were a share of the transfer price; use 40/140.

8. (a) 31 July 2025: 32,000 × 30% = 9,600 [1]. 31 July 2026: 27,500 × 30% = 8,250 [1].

(b)

Provision for unrealised profit
2025                             | 2025
Jul 31 Balance c/d        9,600  | Jul 31 Income statement    9,600
2026                             | 2025
Jul 31 Income statement   1,350  | Aug 1  Balance b/d         9,600
Jul 31 Balance c/d        8,250  |
                          9,600  |                           9,600

Year 1 provision credited from the income statement and carried down [1]; balance brought down [1]; decrease of 1,350 debited, closing balance 8,250 carried down [1]. [5] Examiner insight: Here 30% is a margin on transfer price, so 30% applies directly; reading every percentage as a mark-up gives 30/130 and loses the figures.

9. Realisation: profit is recognised only when goods pass to a customer outside the business [1]. Goods moved from factory to warehouse have not been sold, so the profit on manufacture in closing finished goods is not yet earned [1]. Prudence: assets and profit should not be overstated [1]. Without the provision, finished goods and profit would include profit made only on transfers within the business [1]. [4] Examiner insight: Naming a concept earns little on its own; each one needs linking to the finished goods held at transfer price.

10. (a)

Arkwind Fans Ltd
Manufacturing account for the year ended 30 June 2026
Raw materials 23,700 + 214,600 + 3,800 − 26,100
Direct materials consumed                          216,000  [1]
Direct wages                                       168,500
PRIME COST                                         384,500  [1]
Factory overheads: indirect wages 48,500, power 21,300,
premises 36,000, depreciation of machinery 28,000  133,800  [1]
                                                   518,300
Add WIP 14,200, less WIP 12,500                      1,700
FACTORY COST OF FINISHED GOODS                     520,000  [1]
Profit on manufacture (18%)                         93,600  [1]
Transfer to income statement                       613,600  [1]

(b)

Arkwind Fans Ltd
Income statement for the year ended 30 June 2026
Revenue                                            780,000
Cost of sales: 41,300 + 613,600 − 47,200           607,700  [1]
Gross profit                                       172,300  [1]
Profit on manufacture 93,600 less increase in PUP
900 (7,200 − 6,300)                                 92,700
                                                   265,000  [1]
Expenses: administrative salaries 72,400, selling
39,100, premises 18,000, depreciation 6,000        135,500
Profit from operations                             129,500  [1]
Finance costs                                        6,500
Profit for the year before tax                     123,000
Tax                                                 24,600
Profit for the year after tax                       98,400  [1]

(c) 26,100 + 12,500 + (47,200 − 7,200) = 78,600 [1]. [12] Examiner insight: Opening PUP is 41,300 × 18/118 = 6,300 and closing is 47,200 × 18/118 = 7,200; only the 900 difference belongs in the income statement.

11. (a) Factory cost per lamp = 344,000 ÷ 16,000 = 21.50 [1]. Transfer value = 16,000 × 24.00 = 384,000 [1]. Profit on manufacture = 384,000 − 344,000 = 40,000 [1].

(b) If the factory closed, only 344,000 − 30,000 = 314,000 of costs would stop [1]. Buying in would cost 384,000, so profit would fall by 70,000 a year while the lease runs [1]. Making also keeps control of quality, so the brand is protected [1]. A single outside supplier could raise its price or deliver late once Wrenfold has no factory to fall back on [1]. Closure brings redundancy costs and loss of skilled staff [1]. Against this, buying in would free machinery and working capital, and could make sense when the lease ends if the supplier’s price stays below the factory’s avoidable cost [1]. Judgement: keep the factory for now, because it is 70,000 a year cheaper, and review the decision before the lease expires [1]. [10] Examiner insight: Using the full 344,000 as the saving ignores the continuing lease; a justified decision that spots unavoidable costs beats a list of points.

Where marks are usually lost

• Using a mark-up percentage directly on transfer price (40% instead of 40/140).
• Charging the whole closing provision to profit rather than the change.
• Including office shares of rent, power or depreciation in factory overheads.
• Treating supervisors’ wages as direct labour.
• Showing finished goods at transfer price in the statement of financial position.
• Treating all factory costs as avoidable in a make-or-buy comment.

Next steps

• Manufacturing accounts revision notes
• Manufacturing accounts study guide
• OxfordAQA A-level Accounting hub
• Printable checklist
• All free 10-minute diagnostics
• Book a free trial class

Official syllabus

OxfordAQA International AS and A-level Accounting (9615) specification, Version 1.2, for International AS exams May/June 2025 onwards and International A-level exams May/June 2026 onwards, published by OxfordAQA: section 3.2.7, Manufacturing accounts.