Accounting Multiple Choice Question – 21 November 2017

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

Accounting

The following information is available for Product Z.

Table 18

What would be the difference between the profit for the month using absorption costing and the profit for the month using marginal costing?

Select ONE answer:

  1. Absorption costing profit would be £500 lower
  2. Absorption costing profit would be £1,500 higher
  3. Absorption costing profit would be £1,500 lower
  4. Absorption costing profit would be £3,000 higher
  5. Absorption costing profit would be £3,000 lower

Show your workings to arrive at your answer, and explain and justify your reasons:
……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This is multiple choice question is suitable for Accounting KS5 classes.

The answer is 2 – There has been an increase of 50 units in inventory. Each one has absorbed £30 of overhead (£5*6 hours) which means that £1,500 of extra profit in the month will have been generated by an increase in current assets.

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Author: stuart001uk2014

Referral marketing, business, economics and accounting s​pecialist & corporate mentor

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