Accounting Multiple Choice Question – 27 February 2021

The table below shows cost data for a product. 

• materials   —   £22
• direct labour (4 standard hours × $4.00)   —   £16

The total standard overheads are £250,000 and standard direct labour hours are 100,000. Overheads are absorbed on the basis of direct labour hours. 

What will the standard selling price be, if the company seeks to earn a standard profit of 25% on factory cost?

Select ONE answer:

1. £47.50
2. £48.00
3. £50.62
4. £60.00

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 – £22 + £16 + (250,000 / 100,000 *4) ===> £48 * 1.25

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