Month: October 2021

The information relates to the production of 50,000 units of a product.

• selling price  —  £25 per unit
• variable costs  —  £15 per unit
• contribution  —  £10 per unit

The fixed costs are £300,000.

The unit selling price is increased by 10%.

What is the increase in the margin of safety? 

Select ONE answer:

1. 13.6%
2. 20%
3. 24.2%
4. 30%

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 – £300,000 / £10 = 30,000 units ==> SP £25 * 10% = £27.50 ==> CM £12.5 ==> £300,000 / 12.5 = 24,000 units ==> (50-24 / 50) = 0.52 / (50-30 / 50) = 0.4 ==> 0.52 / 0.4 = 30%

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The following figures relate to the budgeted figures for a product. 

The volume of sales for the product increased by 20%.

What would be the increase in profit? 

Select ONE answer:

1. 20%
2. 52%
3. 76%
4. 88%

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 ==> (£1,100,000 * 1.2) = £1,320,000 – (450,000 *1.2) – 400,000 = £380,000 ==> £380k / £250k = 52%
3. Not correct
4. Not correct

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A company manufactures three products for which the following details (per unit) are available. 

     product X £    product Y £   product Z £

Contribution per unit                160                   175               190

Fixed Overhead per unit           125                   130               160      

Labour hours per unit               1                       1.25               0.75

The company is experiencing a shortage of labour.

In which order should the products be ranked to maximise profit?

Select ONE answer:

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

• Not correct
• Not correct
• Correct
• Not correct

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

On the company’s accounting date, the accountant writes cheques to pay creditors and records them in the books immediately.

The cheques are then deliberately retained by the accountant for two weeks.

What effect does this have on the Balance Sheet?

Select ONE answer:

1. the accounts show a higher figure for cash
2. the accounts show a lower figure for creditors
3. to improve the company’s cash flow
4. to improve the company’s gearing

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.

Which of the following are NOT capital instruments? 

Select ONE answer:

1. debentures
2. share options
3. shares
4. title deeds to freehold property

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

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