Month: November 2020

A company makes 1,000 units and sells these units at £50 each.

The direct materials cost £15,000, direct labour costs £5,000 and fixed overheads are £16,800.

How much profit will be made if the company increases the number of units made and sold to 1,200 without changing the selling price?

Select ONE answer:

1. £15,840
2. £19,200
3. £20,200
4. £23,200

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

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

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

The answer is 2

1. Not correct
2. Correct – 1,200 * £50 = £60,000 – (£20*1,200) – £16,800
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

Which of the following is a benefit of absorption costing?

Select ONE answer:

1. It allows a business to calculate the break-even point for production.
2. It allows a business to calculate the total cost of goods produced.
3. It allows a business to calculate the profit to be made on a product.
4. It allows decision making on utilising spare capacity by increasing production.

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

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

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

The answer is 2

1. Not correct
2. Correct
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

The draft accounts of a business for the year ended 31 December 2019 included the following: turnover £560,000  & gross profit £120,000

It was subsequently discovered that the closing stock was understated by £20,000.

What was the gross profit percentage after correcting this error?

Select ONE answer:

1. 17.9%
2. 20.7%
3. 21.4%
4. 25.0%

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

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

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

The answer is 4

1. Not correct
2. Not correct
3. Not correct
4. Correct – (£120k + £20k) / £560k = 25%

This work is licensed under a Creative Commons Attribution 4.0 International License.

The table shows an extract from a company’s accounts for the year ended 31 December 2019.

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What do these figures show about the company’s liquidity?

Select ONE answer:

1. It declined in year 2, but no further in year 3. 
2. It declined in year 2, but then improved in year 3. 
3. It has continually declined over the 3 years. 
4. It has continually improved over the 3 years.

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

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

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

The answer is 3

1. Not correct
2. Not correct
3. Correct – Year 1 (£44k + £204k / £126k + £34k) = 1.55, Year 2 (£58k + £182k / £152k + £46k) = 1.21, Year 3 (£56k + £162k / £150k + £44k) = 1.12
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.