Ib G Jun17 Accn2 Mark Scheme -

Typical: Selling price £20 per unit, variable cost £12 per unit, fixed costs £40,000. (a) Calculate break-even point; (b) Profit for 8,000 units; (c) Margin of safety at 10,000 units; (d) New break-even if fixed costs rise to £45,000; (e) Evaluate whether to accept a special order at £15 per unit for 5,000 units.

Mark scheme:

| Part | Answer | Marks | Notes | |------|--------|-------|-------| | (a) | Contribution = £8; BEP = £40,000 / £8 = 5,000 units | 3 | 1 for contribution, 1 for formula, 1 for answer | | (b) | Contribution × 8,000 = £64,000 – £40,000 = £24,000 | 2 | OFR from (a) | | (c) | Actual sales 10,000 – BEP 5,000 = 5,000 units; margin of safety % = 50% | 2 | | | (d) | £45,000 / £8 = 5,625 units | 2 | | | (e) | Special order: contribution = £15 – £12 = £3 per unit × 5,000 = £15,000 additional profit. Accept if spare capacity exists. | 4 | 2 for calculation, 2 for qualitative reasoning (e.g., no effect on fixed costs, no regular sales loss) | | Total | 13 | | Ib G Jun17 Accn2 Mark Scheme

Examiner’s expectation: In (e), answers must mention “contribution” and “spare capacity”. Award no marks for “yes because price is higher than variable cost” without linking to contribution. Typical: Selling price £20 per unit, variable cost

One of the most important features. If a student makes an early error but carries the incorrect figure forward correctly, they do not lose the same mark twice. For example, if a student calculates gross profit incorrectly but then uses that figure to compute net profit correctly, they still earn the net profit marks. One of the most important features

Simply looking at the answers is not enough. Follow this 5-step strategy:

Based on real examiner reports for similar sessions, common issues included: