pearson lcci level 3 cost accounting · 2020-03-15 · where a revised output is required for a...

Pearson LCCI

Level 3 Cost Accounting (ASE3017)

Annual Qualification

Review 2014/2015

2012-2013

2 Annual Qualification Review qualifications.pearson.com/lcci

CONTENTS

Introduction 3 Pass Rate Statistics 3

General Strengths and Weaknesses 4 Teaching Points by Syllabus Topic 5

Examples of Candidate Responses 8


INTRODUCTION

The annual qualification review provides qualification–specific support and

guidance to centres. This information is designed to help teachers preparing to teach the subject and to help candidates preparing to take the examination.

The reviews are published in September and take into account candidate performance, demonstrated in both on demand and series examinations, over

the preceding 12 months. Global pass rates are published so you can measure the performance of your centre against these.

The review identifies candidate strengths and weaknesses by syllabus topic area and provides examples of good and poorer candidate responses. It should

therefore be read in conjunction with details of the structure and learning objectives contained within the syllabus for this qualification found on the

website. The review also identifies any actual or proposed changes to the syllabus or

question types together with their implications.

PASS RATE STATISTICS

The following statistics are based on the performance of candidates who sat this qualification between 1 October 2014 and 31 August 2015.

Global pass rate 44.4%*

Grade distributions of candidates achieving pass or higher

Pass 13.9%

Merit 22.7% Distinction 7.8%

* This figure excludes absences on the day of the exam


GENERAL STRENGTHS AND WEAKNESSES

After analysing the results of the cost accounting papers at level 3, it would

appear that candidates fall into the two following categories.

Those who have an understanding of the subject and have prepared well

for the examination

Those who have limited understanding of the subject and have not

prepared adequately for the examination

Candidates who fall into the latter category may benefit from re-visiting a level 2 course before attempting level 3 again.

Strengths

• An understanding of what is required by the question

• An understanding of the basic cost accounting terminology

• The ability to answer standard questions.

Weaknesses

• Dealing with, and working logically through, information given in the

questions

• Poor hand-writing. Examiners are not always able to decipher

candidate responses.

• Not providing workings to show how final answers are arrived at.


TEACHING POINTS BY SYLLABUS TOPIC

Syllabus Topic 1: Materials and stock control

The questions set on calculating an annual budgeted cost and an economic order quantity (series 4/2014) were generally well answered with the

exception of the stock holding cost calculation, where the closing stock was not taken into consideration when determining the average stock. Many candidates could not identify the relevant order quantities and as a result did not include

the EOQ in their cost comparisons. The descriptive element of the question was also poorly answered.

The question set on material cost (series 2/2015) was generally answered well, although a common error included not taking into consideration the sale of the

rejected or waste material when establishing the overall stock value.

The ‘Just in Time’ question (series 3/2015) was poorly answered with many candidates not converting the unit requirement into weight and incorrectly

calculating the weight loss when establishing the purchase order quantity requirement.

Descriptions relating to the Just in Time approach to stock management were not so well answered. Most candidates understood the principles but few knew the implications.

Syllabus Topic 2: Costing methods and systems

The process account question (series 4/2014) was generally answered well.

However, a common error when calculating the value of the transfer to the finished goods was not to take into consideration the opening stock value. The abnormal loss account was poorly answered with many candidates opting not

to attempt it. Many of those who did complete this part did not take into consideration the value of the scrap sales.

The activity based costing question (series 2/2015) was poorly attempted with many candidates not answering the question. Common errors included mixing total and unit costs when calculating the overhead cost, and including the

purchase price but not the driver wage in the operational cost.

The question on preparing manufacturing accounts (series 3/2015) in both

absorption and marginal costing format was reasonably well answered. Common errors included using sales units for the production costs, and not including the closing stock figure in the accounts. The descriptive part of the

question confirmed many candidates did not understand the reconciliation process.

Syllabus Topic 3: Cost-volume-profit (CVP) analysis

Candidates seem well prepared for the calculation of contribution/sales ratios, break even points, margins of safety and related profits (all three series) and

performed the tasks well, although in series 2/2015 many candidates did not perform the hi/low calculation to separate the fixed and variable costs.

Candidates did not perform as well as expected with the standard CPV analysis type question where both selling price and output have changed; in particular


where a revised output is required for a given profit (series 2 and series 3/2015).

Many candidates poorly answered the descriptive question asking for assumptions by not providing enough detail in their answer (series 2/2015) (i.e

It’s variable cost per unit that is constant, not the variable costs as this varies with output).

Syllabus Topic 4: Budgetary planning and control

This flexible budget question (series 4/2014) was very poorly answered; this question being based on a transport company as opposed to the more

traditional production company. However, if this was reason for the poor performance candidates need to be made aware that the same flexible budget techniques equally apply to service companies. Of those who did attempt this

part of the question many did very well. Common errors were not to include the vehicle travel variance and, although correctly working the income from

customers, incorrectly describing the variance as adverse when the income was in excess of the flexed budget. Drivers wage and office costs budgets also caused problems with the use of the hi/low calculation.

Very few candidates could provide a full answer to the difference between a forecast and budget, and very few attempted to state the meaning of the

terms fixed and flexible budget, or state the objectives for preparing flexible budgets.

A question requiring the preparation of a number of budgets (series 2/2015) was reasonably well attempted, although common errors included not adjusting the dates for material purchased and wrongly dating the labour

bonus payment. The cash budget was well answered and presented, although a few candidates incorrectly transferred their previously calculated budget

figures without date adjustment.

The extended cash budget question (series 3/2015) was answered well, although the transfer of costs to the profit statement caused a few problems

with candidates not date adjusting their individual period payments.

Syllabus Topic 5: Standard costing and variances

The standard variance questions requesting calculation of both sales and cost variances (series 4/2014 and series 3/2015) were reasonably well answered. However, many candidates although correctly calculating the more complex

fixed overhead variance, had problems with the less complex total labour and total material variance. A few candidates could not distinguish between the

fixed overhead capacity and efficiency variance.

The profit reconciliation statement was completed well in both series papers, however a number of candidates did not include the closing stock in their

actual profit calculation.

The material usage, mix and yield variance question (series 2/2015) was

generally poorly answered.

Very few candidates were able to correctly describe the meaning of the material mix and yield variances. However, the calculation for the mix variance

was reasonably well answered; a common error included not summing the two.


The yield variance calculation was poorly answered with many candidates not attempting this part and those who did often using an incorrect formula

The material usage variance was reasonably well answered although many candidates had problems with including the mix and yield variances in the

reconciliation statement.

Syllabus Topic 6: Accounting systems

No questions relating to this section of the syllabus were set.


EXAMPLES OF CANDIDATE RESPONSES

These candidate responses were taken from Series 3/15 Question 1


Example 1


Commentary on Example 1

a) Correct calculation for the ingredient weight in the finished product,

however candidate should have totalled the daily quantities as the

question asked for the weekly purchase order. The candidate did not

cater for the weight loss of ingredient A or the opening/closing stock

associated with ingredient B (awarded 4 out of 7 for the initial

calculations).

b) Although the candidate listed some relevant figures their calculation was

not correct and did not provide an order date the question asked for

(awarded 0 out of 6).

c) The answer provided was not a delivery schedule (awarded 0 out of 3).

d) A more detailed answer would have been preferred, however credit was

given to the answer ‘no stock’ but not to ‘daily delivery’ as this is not

necessarily JIT (awarded 1 out of 2).

e) No credit was given to these answers as they were not considered

implications (awarded 0 out of 2).


Example 2



a) The candidate correctly calculated the weight of ingredients A and B in

the finished product but incorrectly calculated the weight loss for

ingredient A and did not cater for the opening/closing stock associated

with ingredient B (awarded 4 out of 7 for the initial calculations).

b) The candidate did not attempt this part (awarded 0 out of 6).

c) The candidate correctly calculated the daily weight of ingredient A in the

finished product but incorrectly calculated the addition weight due to the

manufacturing loss. An own figure was credited to the final daily total as

the candidate made the same error in calculating manufacturing weight

loss as in part (a) and actually added the amount to establish the

production weight required (awarded 2 out of 3).

d) and e) Although a more detailed answer would have been preferred, the

candidate’s answer indicated an understanding of the differences

between the principles and implications. Full marks were credited to this

part of the question (awarded 4 out of 4).


Example 3



a) Although the candidate did not arrive at the correct answers for

ingredient A or B, credit was given for the workings. The only error

detected in the ingredient A calculation was to multiply by 0.8 instead of

dividing by 0.8 for the weight loss and with ingredient B was the final

addition (awarded 5 out of 7 for the workings).

b) The candidate provided a correct solution to the question (awarded 6 out

of 6).

c) Again an own figure was credited to the final daily total as the candidate

made the same error in calculating manufacturing weight loss as in part

(a) and actually added the amount to establish the production weight

required (awarded 2 out of 3).

d) The candidate provided two accurate principles of JIT (awarded 2 out of

2).

e) The candidate did not attempt this part (awarded 0 out of 2).


Example 4



A well-presented and easy to follow answer to the complete question

a) Correct workings with answers highlighted (awarded 7 out of 7).

b) A calculation error on Tuesday’s daily requirement resulted in the

candidates not completing the daily stock record. This being required to

establish the reorder date. An own figure was awarded for the candidates

date selection (awarded 3 out of 6).

c) Correct schedule and workings (awarded 3 out of 3).

d) and e) The candidate provided a detailed explanation of both the principles

and implications of JIT (awarded 4 out of 4).

Pearson Education Ltd

80 Strand London

WC2R 0RL

Tel. +44 (0) 247 651 8951 Fax. +44 (0) 247 651 6566

Email. [email protected] qualifications.pearson.com/lcci

pearson lcci level 3 cost accounting · 2020-03-15 · where a revised output is required for a...

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