L2

Pearson
LCCI Level 2 Certificate in
Cost Accounting
(ASE20110)

SAMPLE ASSESSMENT MATERIALS

First teaching from September 2019
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© Pearson Education Limited 2020
 Pearson LCCI
Sample assessment material for first teaching September 2019

Morning/Aft (Time: 3 hours) Paper Reference ASE20110

Certificate in Cost Accounting

Level 2
Please check the examination details above before entering your candidate information

Candidate name

Centre Code Candidate Number

Candidate ID Number

Total Marks
You do not need any other materials.

Instructions
• Use black ink or ball-point pen
– pencil can only be used for graphs, charts, diagrams, etc.
• Fill in the boxes at the top of this page with your name, candidate number,
centre code and your candidate ID number.
• Answer all questions.
• Answer the questions in the spaces provided
– there may be more space than you need.

Information
• The total mark for this paper is 100.
• The marks for each question are shown in brackets
– use this as a guide as to how much time to spend on each question.
• Calculators may be used.
Advice
• Read each question carefully before you start to answer it.
• Try to answer every question.
• You areyour
Check answers if you have time at the end.
• advised to show your workings.

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Pearson LCCI Level 2 Certificate in Cost Accounting – Sample Assessment Materials 1

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 Answer ALL questions. Write your answers in the spaces provided.
Some questions must be answered with a cross in a box . If you change your mind about an
answer, put a line through the box and then mark your new answer with a cross .
1 (a) Which one source of production overhead is direct expenses?
(1)
A Rent apportioned to the factory

B Production supervisor salary

C Cooling fluid for drilling machines.

D Royalties for product design

(b) State the meaning of overhead apportionment.
(1)

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Farm Gates Ltd manufactures gates and has three production departments
(Machining, Assembly and Paint).
Production overheads for the next year are expected to be:

Supervisor’s salary 28 000

Rent 30 000

Depreciation of machinery 12 000

Heating and lighting 15 000

Repair work to assembly line 4 500

The following information is also available:

Machining Assembly Paint

department department department

Floor area (square metres) 7 000 6 000 2 000

Number of production staff 5 6 3

Cost of machinery ($) 50 000 10 000 20 000

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 (c) Complete, using an appropriate basis, the production overhead distribution table.
(11)

Production overhead distribution table

Production departments

Total Machining Assembly Paint

Expense Basis
($) ($) ($) ($)
Supervisor’s
salary

Rent

Depreciation of
machinery
Heating and
lighting
Repair work to
assembly lines

Totals

Each of the production staff is expected to work 40 hours per week for 50 weeks
during the next year.
(d) Calculate an overhead absorption rate for each of the machining, assembly and
paint departments based on production labour hours for those departments.
(3)
Machining Department:

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Assembly Department:

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Paint Department:

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 Budgeted output of completed gates is 2 000 per year.
Budgeted total material cost, including paint, for the next year is $32 000.
Budgeted direct labour cost in all three productive departments is $15 per hour.
An order for 20 gates has been received from a farmer.
(e) Prepare a production cost statement for the order.
The statement must include labour, materials and overheads.
(6)

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(Total for Question 1 = 22 marks)

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2 (a) (i) Identify the term that applies to a cost that remains the same as the level of
activity increases.
(1)
A Prime cost

B Stepped cost

C Fixed cost

D Relevant cost
(ii) Costs classification is the arrangement of costs into logical groups.
Identify which classification a ‘semi-fixed cost’ belongs to.
(1)
A Behaviour

B Element

C Normality
D Function
(b) Give two limitations of break-even analysis.
(2)

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 Lee has decided to start a business making and selling pizzas.
Lee sets her selling prices by comparing prices of similar local businesses rather than
using a cost plus pricing system.
(c) (i) State the meaning of cost plus pricing.
(1)

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(ii) State one advantage of Lee using cost plus pricing.

(1)

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(iii) State one disadvantage of Lee using cost plus pricing.

(1)

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 Lee will make the pizzas herself and employ a sales assistant.
The following sales and costs have been estimated for the first year.

Sales:

Sales 400 pizzas per week

Selling price $5.50 per pizza

Costs:

Rent of premises and equipment $180 per month

Electricity $70 per month

Wages of sales assistant $750 per month

Ingredients for pizza base $22 per batch of 10 pizzas

Cheese for pizzas $1.40 per pizza

Boxes (one per pizza) $40 per 100 boxes

Lee intends to trade 50 weeks per year.

(d) Calculate the break-even point in number of pizzas and revenue for Lee’s first year
of trading.
(7)

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(e) Prepare a break-even chart, for an output of 0 to 20 000 units, on the graph paper
provided.
Your chart must show:
• horizontal-axis and vertical-axis label
• revenue line
• fixed cost line
• total cost line
• break-even point in revenue
All lines must be labelled
(5)

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120000

100000

80000

60000

40000

20000

0
4 8 12 16 20

(Total for Question 2 = 19 marks)

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Issue 2- September 2020 © Pearson Education Limited 2020
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3 (a) (i) A business wishes to buy some materials from a supplier.
Identify the document that would be sent from the buyer to the supplier.
(1)
A Purchase order

B Credit note

C Sales invoice

D Debit note
(ii) Identify the correct definition of prime cost.
(1)
A total cost – direct labour – direct materials

B direct labour + direct materials – direct expenses

C direct labour + direct materials + direct expenses

D fixed cost + direct materials + direct labout
(b) State the meaning of:
(i) job costing
(1)

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . .

(ii) batch costing

(1)

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . .

12
*S63931A01224*
12 Pearson LCCI Level 2 Certificate in Cost Accounting – Sample Assessment Materials
Issue 2- September 2020 © Pearson Education Limited 2020
 Quality Printers Ltd has been asked by a customer to prepare two quotations:
• One quotation for printing 500 copies of a book
• One quotation for printing 1 000 copies of a book.
The printers have estimated the following costs:

Paper (per 500 copies) $150

Direct labour (per 500 copies) 5 hours at $12 per hour

Setting up print machine 25 hours at $16 per hour

Artwork 8 hours at $20 per hour

Overheads 75% of the direct labour cost

Profit mark-up 20% on cost

(c) Calculate the:

(i) variable cost per book
(3)

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . .

(ii) total fixed cost

(2)

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . .

*S63931A01324*
Pearson LCCI Level 2 Certificate in Cost Accounting – Sample Assessment Materials 13
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Issue 2- September 2020 © Pearson Education Limited 2020
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 (d) Prepare quotations for 500 copies and for 1 000 copies providing your answer in a
columnar format.
(5)

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . .

(e) Calculate the price per book for:

(i) 500 copies
(1)

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . .

(ii) 1 000 copies

(1)

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . .

(f ) (i) Calculate the profit margin per book if the order is 500 copies
(1)

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . .

(ii) Calculate the profit margin per book if the order is 1 000 copies
(1)

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . .

(Total for Question 3 = 18 marks)

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*S63931A01424*
14 Pearson LCCI Level 2 Certificate in Cost Accounting – Sample Assessment Materials
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*S63931A01524*
Pearson LCCI Level 2 Certificate in Cost Accounting – Sample Assessment Materials 15
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Issue 2- September 2020 © Pearson Education Limited 2020
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4 A small company employs three semi-skilled workers and one supervisor at the
following rates of pay:
Three semi-skilled workers at $12.00 per hour each
One supervisor at $16.00 per hour
In total they produce 160 units in a 40-hour week.
(a) Calculate the labour cost per unit
(1)

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . .

A customer wants to increase its order by 25 units per week.

There are three options on how best to manufacture the additional 25 units.
Option 1. Overtime. (Paid for after hours working Monday to Friday)
• Introduce overtime at a premium of 40% of basic pay for the hours required to
manufacture the additional 25 units.
• The manufacturing time to produce one unit of the product will not change
Option 2. Output-based bonus scheme.
• The three semi-skilled workers each receive a bonus of $0.60 for every unit
produced.
• The supervisor receives a bonus of $0.80 for every unit produced
• Estimated production will be 185 units in the 40 hour week.
Option 3 Saturday working
• Pay an overtime premium of 50% to both semi-skilled workers and supervisor
• The semi-skilled workers receive a bonus of $0.40 for every unit produced
• Employ two additional labourers at $14 per hour
• Additional labourers will not receive a bonus
• The supervisor receives a bonus of $0.60 for every unit produced
• Estimated production of additional 25 units to be completed in four hours

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*S63931A01624*
16 Pearson LCCI Level 2 Certificate in Cost Accounting – Sample Assessment Materials
Issue 2- September 2020 © Pearson Education Limited 2020
 (b) Calculate the total labour cost, showing the overtime premium, for producing all
185 units per week using:
(i) Option 1
(6)

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . .

(ii) Option 2
(4)

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . .

*S63931A01724*
Pearson LCCI Level 2 Certificate in Cost Accounting – Sample Assessment Materials 17
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Issue 2- September 2020 © Pearson Education Limited 2020
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. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . .

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(iii) Option 3
(9)

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18
*S63931A01824*
18 Pearson LCCI Level 2 Certificate in Cost Accounting – Sample Assessment Materials
Issue 2- September 2020 © Pearson Education Limited 2020
 (c) Explain one disadvantage to the company/employers of adopting Option 2
(2)

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(Total for Question 4 = 22 marks)

*S63931A01924*
Pearson LCCI Level 2 Certificate in Cost Accounting – Sample Assessment Materials 19
19
Issue 2- September 2020 © Pearson Education Limited 2020
Turn over
5 (a) State the meaning of adverse labour efficiency variance.
(1)

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Temi Fluids manufactures a single product for the motor industry.

The standard costs for one unit of output for Period 1 were as follows:

Direct material 6 litres at $3 per litre

Direct labour 4 hours at $8 per hour

Budgeted fixed overheads for Period 1 were $6 000.

Budgeted production for Period 1 was 1 200 units.
The actual production and costs relating to Period 1 were as follows:

Production 1 200 units

Direct Materials 7 320 litres at a total cost of $22 960

Direct labour 4 750 hours at a total cost of $37 500

Fixed production overhead $5 800

(b) Calculate the following variances for the 1200 units produced in Period 1,
indicating if the variance is adverse or favourable.
(i) Direct material price
(2)

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20
*S63931A02024*
20 Pearson LCCI Level 2 Certificate in Cost Accounting – Sample Assessment Materials
Issue 2- September 2020 © Pearson Education Limited 2020
 (ii) Direct material usage
(2)

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(iii) Direct labour rate

(2)

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(iv) Direct labour efficiency

(2)

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(v) Total fixed production overhead

(2)

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*S63931A02124*
Pearson LCCI Level 2 Certificate in Cost Accounting – Sample Assessment Materials 21
21
Issue 2- September 2020 © Pearson Education Limited 2020
Turn over
 (c) A business may have an adverse labour efficiency variance.
Explain one action the business could take to reduce the variance
(2)

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(d) Evaluate the price and usage variances for material for Temi Fluids, providing
recommendations for the future.
(6)
Price variance

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Usage Variance

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22
*S63931A02224*
22 Pearson LCCI Level 2 Certificate in Cost Accounting – Sample Assessment Materials
Issue 2- September 2020 © Pearson Education Limited 2020
 Recommendations

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(Total for Question 5 = 19 marks)

*S63931A02324*
Pearson LCCI Level 2 Certificate in Cost Accounting – Sample Assessment Materials 23
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Issue 2- September 2020 © Pearson Education Limited 2020
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24 Pearson LCCI Level 2 Certificate in Cost Accounting – Sample Assessment Materials
Issue 2- September 2020 © Pearson Education Limited 2020
Mark Scheme

Sample Assessment Materials

Pearson LCCI
Level 2 Certificate in Cost Accounting
(ASE 20110)
 General Marking Guidance

• All candidates must receive the same treatment. Examiners must mark the

first candidate in exactly the same way as they mark the last.

• Mark schemes should be applied positively. Candidates must be rewarded

for what they have shown they can do rather than penalised for omissions.

• Examiners should mark according to the mark scheme not according to

their perception of where the grade boundaries may lie.

• There is no ceiling on achievement. All marks on the mark scheme should

be used appropriately.

• All the marks on the mark scheme are designed to be awarded. Examiners

should always award full marks if deserved, i.e. if the answer matches the

mark scheme. Examiners should also be prepared to award zero marks if

the candidate’s response is not worthy of credit according to the mark

scheme.

• Where some judgement is required, mark schemes will provide the

principles by which marks will be awarded and exemplification may be

limited.

• When examiners are in doubt regarding the application of the mark scheme

to a candidate’s response, the team leader must be consulted.

• Crossed out work should be marked UNLESS the candidate has replaced it

with an alternative response.

• Own figure (of) marks would only be awarded where workings are shown to

indicate the correct method has been used.

Pearson LCCI Level 2 Certificate in Cost Accounting – Sample Assessment Materials 25

Issue 2- September 2020 © Pearson Education Limited 2020
Question Answer AO1 1 Mark
number
1(a)
D Royalties for product design
(1)

Question Answer AO1 1 Mark

number
1(b) Award 1 mark for a correct response, up to a maximum of 1
mark

Overhead apportionment is the sharing of overheads over a

number of cost centres (1)

Accept any other appropriate response

(1)

26 Pearson LCCI Level 2 Certificate in Cost Accounting – Sample Assessment Materials

Issue 2- September 2020 © Pearson Education Limited 2020
Q no Answer AO2 11 Mark
1(c) Award marks as indicated

Production overhead distribution table

Production departments
Total Machining Assembly
Expense Basis ($) ($) ($) Paint ($)

Supervisor’s (Number 6 000 (1)

28 000 10 000 12 000
salary of) Staff (1) for all 3

Floor area 4 000 (1)

Rent (1) 30 000 14 000 12 000 for al 3
Depreciation Machine 3 000 (1) for
of machinery cost (1) 12 000 7 500 1 500 all 3
Heating and Floor area 2 000 (1)
lighting (1) 15 000 7 000 6 000 for all 3
Repair work
to assembly
line Allocate (1) 4 500 4 500 (1)
15 000 (1of
Totals 89 500 38 500 36 000 for all 3)
(11)

Pearson LCCI Level 2 Certificate in Cost Accounting – Sample Assessment Materials 27

Issue 2- September 2020 © Pearson Education Limited 2020
Question Answer AO2 3 Mark
number
1(d) Award marks as indicated

A calculation that includes:

Overhead absorption rates:

Machining Dept:
Total hours worked = 40 × 50 × 5 = 10 000 hours
Absorption rate = 38 500/10 000 = $3.85 per direct labour hour
(1of)
Assembly Dept:
Total hours worked = 40 × 50 × 6 = 12 000 hours
Absorption rate = 36 000/12 000 = $3.00 per direct labour hour
(1of)
Paint Dept:
Total hours worked = 40 × 50 × 3 = 6 000 hours
Absorption rate = 15 000/6 000 = $2.50 per direct labour hour
(1of)

Accept own figure marks as indicated (3)

Question Answer AO2 6 marks, Mark

number
1(e) Award marks as indicated

A statement must include:

Cost Statement for 20 gates.

$
Material = (32 000/2 000) × 20 = 320(1)
Labour = (10 000+12 000+6 000) × 15 × (20 2 000) = 4 200(1)
Overheads
Machine dept: 3.85 × (5 × 50 × 40) × (20/2 000) = 385(1of)
Assembly dept: 3.00 × (6 × 50 × 40) × (20/2 000) = 360(1of)
Paint dept: 2.50 × (3 × 50 × 40) × 20/2 000) = 150(1of)
Total production cost $5 415 (1of)

Accept own figure marks as indicated (6)

TOTAL FOR QUESTION 1 – 22 MARKS

28 Pearson LCCI Level 2 Certificate in Cost Accounting – Sample Assessment Materials

Issue 2- September 2020 © Pearson Education Limited 2020
Question Answer AO1 1
number Mark
C Fixed cost
2(a) (i)
(1)

Question Answer AO1 1

number Mark
A Behaviour
2(a) (ii)
(1)

Question Answer AO1 2

number Mark
2(b) Award 1 mark for each limitation up to a maximum of 2
marks

• Unit material cost not always constant at different

levels of output (1)
• Unit labour cost not always constant at different levels
of output (1)
• Total fixed costs not always constant at different levels
of output (1)
• Selling price is not always constant at different levels
of output (1)
• It assumes all output is sold (1)
• Costs cannot always be split into fixed and variable (1)

Accept any other appropriate response (2)

Question Answer AO1 1 Mark

number
2c (i) Award 1 mark for correct response up to a maximum of 1
mark

Cost plus pricing is where profit is added to the cost of

production (1)

Accept any other appropriate response (1)

Pearson LCCI Level 2 Certificate in Cost Accounting – Sample Assessment Materials 29

Issue 2- September 2020 © Pearson Education Limited 2020
Question Answer AO3 1 Mark
number
2c (ii) Award 1 mark for an advantage up to a maximum of 1 mark

• A positive contribution would be guaranteed (1)

• It may be easy to decide the selling price if a percentage is
added to the cost of producing the item (1)

Accept any other appropriate response (1)

Question Answer AO3 1 Mark

number
2c (iii) Award 1 mark for a disadvantage up to a maximum of 1
mark

• Too high a profit percentage can result in a price that is

above the market price (1)
• Too low a profit percentage can result in Lee not covering
the fixed cost (1)

Accept any other appropriate response (1)

30 Pearson LCCI Level 2 Certificate in Cost Accounting – Sample Assessment Materials

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Question Answer AO2 7 Mark
number
2(d) Award marks as indicated

Break-even point:
Fixed costs for year: $
Rent ($180 × 12) 2 160
Electricity ($70 × 12) 840
Wage ($750 × 12) 9 000 (1 for all 3)
12 000 (1of)

Variable costs per pizza: $

Ingredients ($22 / 10) 2.20
Boxes ($40 / 100) 0.40
Cheese 1.40 (1 for all 3)
4.00 (1of)

Contribution per pizza ($5.50 – $4.00) = $1.50 (1of)

Break-even point ($12 000 / $1.50) = 8 000 pizzas (1of)
Break-even revenue ($5.50 × 8 000) = $44 000 (1of)

Accept own figure marks as indicated (7)

Pearson LCCI Level 2 Certificate in Cost Accounting – Sample Assessment Materials 31

Issue 2- September 2020 © Pearson Education Limited 2020
Question Answer AO2 3 AO3 2 Mark
number
2(e) Award marks as indicated

Axis for number of pizzas/output and Axis for revenue and costs (1)
Revenue line drawn correctly and labelled (1)
Fixed costs line drawn correctly and labelled (1of)
Total costs line drawn correctly and labelled (1of)
Break-even point in revenue indicated (1of)

Accept own figure marks as indicated 5

TOTAL FOR QUESTION 2 – 19 MARKS

32 Pearson LCCI Level 2 Certificate in Cost Accounting – Sample Assessment Materials

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 Question Answer AO1 1 Mark
number

3(a)(i) A Purchase order

(1)

Question Answer AO1 1 Mark

number

3(a)(ii) C direct labour + direct materials + direct expenses

(1)

Question Answer AO1 1 Mark

number
3(b)(i) Award 1 mark for a correct response up to a
maximum of 1 mark

A method to record the costs of a single manufacturing

or service job to customers specification (1)

Accept any other appropriate response (1)

Question Answer AO1 1

number Mark
3(b)(ii) Award 1 mark for a correct response up to a
maximum of 1 mark

A method to record the total cost of producing a quantity

of identical items repeatedly manufactured in one
production run (1)

Accept any other appropriate response (1)

Pearson LCCI Level 2 Certificate in Cost Accounting – Sample Assessment Materials 33

Issue 2- September 2020 © Pearson Education Limited 2020
Question Answer AO2 3 Mark
number
3(c)(i) Award marks as indicated

Variable costs per book

$
Paper (150 / 500) = 0.30
Labour (5 x 12 / 500) = 0.12 (1 for both)
Overheads (0.75 x 0.12) = 0.09 (1of)
Total variable cost = 0.51 per book (1of)

Accept own figure marks as indicated (3)

Question Answer AO2 2 Mark

Number
3(c)(ii) Award marks as indicated

Total fixed costs

$
Setting up costs (25 x $16) = 400
Artwork (8 x $20) = 160 (1 for both)
Total fixed cost $560 (1of)

Accept own figure marks as indicated (2)

34 Pearson LCCI Level 2 Certificate in Cost Accounting – Sample Assessment Materials

Issue 2- September 2020 © Pearson Education Limited 2020
Question Answer AO2 5 Mark
number
3(d) Award 1 mark for two correct answers as indicated

Quotation
500 copies 1 000
copies
$ $
Costs
Variable 255 510 (1of for both)
Fixed 560 560 (1of for both)
815 1 070
Add profit 163 214 (1of for both)
Quotation 978 (1of) 1 284 (1of)

Accept own figure marks as indicated (5)

Question Answer AO2 1 Mark

number
3(e) (i) Award 1 mark as indicated

500 copies: $978 / 500 = $1.96 (1of)

Accept own figure marks as indicated (1)

Question Answer AO2 1 Mark

number
3(e)(ii) Award 1 mark as indicated

1 000 copies: $1 284 /1000 = $1.28 (1of)

Accept own figure marks as indicated (1)

Pearson LCCI Level 2 Certificate in Cost Accounting – Sample Assessment Materials 35

Issue 2- September 2020 © Pearson Education Limited 2020
Question Answer AO2 1 Mark
number
3(f)(i) Award 1 mark as indicated

Profit margin for 500 copies

Profit/sales × 100% = 163/978 = 16.67% (1of)

Accept own figure marks as indicated (1)

Question Answer AO2 1 Mark

number
3(f)(ii) Award 1 mark as indicated

Profit margin for 1 000 copies:

Profit/sales × 100% = 214/1 284 = 16.67% (1of)

Accept own figure marks as indicated (1)

TOTAL FOR QUESTION 3 – 18 MARKS

36 Pearson LCCI Level 2 Certificate in Cost Accounting – Sample Assessment Materials

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Question AO2 2 Mark
number
4(a) Award 1 mark as indicated

Current weekly labour cost $

Semi-skilled worker (40 hours × 3 × $12) = 1 440
Supervisor (40 hours × 1 × $16)
=640
Weekly labour cost 2 080 (1)
(1)

Question AO2 7 Mark

number
4(b)(i) Award marks as indicated

Time to produce 1 unit = 0.25 hours (40/160)

Additional time to produce 25 units = 6.25 hours (1)

Option 1 $
Basic pay semi-skilled (3 × 46.25 x 12) 1 665 (1of)
Basic pay supervisor (1 × 46.25 x 16) 740 (1of)
Overtime premium payments
Semi-skilled (3 × 6.25 x 12 × 0.4) 90 (1of)
supervisor (1 × 6.25 x 16 × 0.4) 40 (1of)
Total Labour cost (option 1) 2 535 (1of)

Accept own figure marks as indicated (6)

Question AO2 5 marks Mark

number
4(b)(ii) Award marks as indicated

Option 2 $
Bonus paid to semi-skilled (3 × 0.60 × 185) = 333 (1)
Bonus paid to supervisor (1 × 0.80 × 185) = 148 (1)
Bonus paid for week 481
Plus current weekly labour cost 2 080 (1of)
Total Labour cost (option 2) 2 561 (1of)

Accept own figure marks as indicated (4)

Pearson LCCI Level 2 Certificate in Cost Accounting – Sample Assessment Materials 37

Issue 2- September 2020 © Pearson Education Limited 2020
Question AO2 9 Mark
number
4(b)(iii) Award marks as indicated

Labour cost for Saturday working $

Basic pay for Semi-Skilled = (3×12×1×4) = 144 (1)
Overtime premium for Semi-Skilled = (3×12×0.5 ×4) = 72 (1)
Bonus for Semi-Skilled = (25 × 0.4 × 3) = 30 (1)
Basic pay for Supervisor = (1×16×1×4) = 64 (1)
Overtime premium for Supervisor = (1×16×0.5×4) = 32 (1)
Bonus for Supervisor = (25×0.6×1) = 15 (1)
Additional labourers (2×14×4) = 112(1)
$
Normal labour weekly working cost = 2 080 (1of)
Total direct labour cost = 2 549 (1of)

Accept own figure marks as indicated (9)

Question AO3 2 Mark

number
4 (c) Award one mark for the identification of a disadvantage (1)
and one mark for the linked justification (1) up to a
maximum of 2 marks

• Option 2 records the highest labour cost (1) and if

customer does not continue with new order quantity, the
unit cost would increase (1)
• Once Option 2 has been introduced it will be difficult to
withdraw (1) as labour relations/ productivity might
deteriorate (1)

Accept any other appropriate response (2)

TOTAL FOR QUESTION 4 – 22 MARK

38 Pearson LCCI Level 2 Certificate in Cost Accounting – Sample Assessment Materials

Issue 2- September 2020 © Pearson Education Limited 2020
Question AO1 1
number Mark
5(a) Award 1 mark for a correct response, up to a maximum of 1
mark

Adverse labour efficiency variance occurs when labour takes

longer than budgeted to produce expected output

Accept any other appropriate response (1)

Question AO2 2 Mark

number
5(b)(i) Award marks as indicated

Total direct material price variance $

Actual purchases at standard price (7 320 litres at $3 per litre)
= 21 960 (1)
Actual cost of purchases = 22 960
Total direct material price variance 1 000 Adv (1of)

Accept own figure marks as indicated (2)

Question AO2 2 Mark

number
5(b) (ii) Award marks as indicated

Total direct material usage variance $

Budgeted material at standard price (1 200 units x 6 litres x $3)

= 21 600 (1)
Actual material at standard price (7 320 litres x $3) = 21 960
Total direct material usage variance 360 Adv (1of)

Accept own figure marks as indicated (2)

Pearson LCCI Level 2 Certificate in Cost Accounting – Sample Assessment Materials 39

Issue 2- September 2020 © Pearson Education Limited 2020
Question AO2 2 Mark
number
5(b) (iii) Award marks as indicated

Total direct labour rate variance

Actual labour hours at standard rate(4 750 hours x $8) = 38 000
(1)
Actual labour cost = 37 500
Total direct labour rate variance 500 Fav (1)

(2)

40 Pearson LCCI Level 2 Certificate in Cost Accounting – Sample Assessment Materials

Issue 2- September 2020 © Pearson Education Limited 2020
Question AO2 2 Mark
number
5(b) (iv) Award marks as indicated

Total direct labour efficiency variance

Budgeted hours at standard cost (1 200 x 4 x $8) = 38 400 (1)
Actual hours at standard cost (4 750 x $8) = 38 000
Total direct labour efficiency variance 400 Fav (1)

(2)

Question AO2 2 Mark

number
5(b) (v) A calculation that includes:

Total fixed production overhead variance

Overhead absorption rate = Budgeted overhead / budgeted output
= $6 000 / 1 200 units = $5 per unit (1)

Overhead absorbed at standard rate (1 200 units x $5) = 6 000

Actual overhead = 5 800
Total fixed production overhead variance 200 Fav (1of)

Accept own figure marks as indicated (2)

Question AO3 2 Mark

number
5 (c) Award 2 marks for the identification of an action a business
could take to reduce the variance (1) with a linked justification
(1), up to a maximum of 2 marks.

• Retrain staff (1) as this will increase the rate of production (1)
• Employ more experienced staff (1) who can produce more
items in a given period of time/work faster (1)
• Offer incentives (1) as this would encourage staff to work
harder/faster (1)

Accept any other appropriate response (2)

Pearson LCCI Level 2 Certificate in Cost Accounting – Sample Assessment Materials 41

Issue 2- September 2020 © Pearson Education Limited 2020
Question AO4 4 AO5 2
number Mark
5 (d) Indicative content. Allow for own figure rule.

Price Variance
• Temi Fluids paid more for material than budgeted (1)
• Suppliers may have increased their prices (1)
• Materials may have been in short supply (1)

Usage variance
• Temi Fluids used more materials than budgeted (1)
• Wastage has been higher than budgeted (1)
• Poor quality material (1)

Maximum 4 marks for the analysis. Maximum of 3 marks for

arguing one side only.

Recommendations
• Source cheaper supplier (1)
• Negotiate with existing suppliers (1)
• Improve supervision to reduce wastage (1)
• Purchase better quality materials (1)

Maximum 2 marks for the recommendation

Accept any other appropriate response

(6)

TOTAL FOR QUESTION 5 – 19 MARKS

42 Pearson LCCI Level 2 Certificate in Cost Accounting – Sample Assessment Materials

Issue 2- September 2020 © Pearson Education Limited 2020
Pearson LCCI Level 2 Certificate in Cost Accounting – Sample Assessment Materials 43
Issue 2- September 2020 © Pearson Education Limited 2020
September 2020

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