Month: December 2021

The following information applies to X Ltd.

output (units) sales £000 profits £000

750 750 100
1000 1000 250

What is the contribution to sales ratio?

Select ONE answer:

1. 25%
2. 40%
3. 60%
4. 87%

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
4. Not correct

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The diagram shows a break-even chart.

Which line represents the margin of safety?

Select ONE answer:

1. WX
2. WY
3. XY
4. XZ

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
4. Not correct

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

The following information relates to a product:

• fixed costs – £72,000
• desired profit – £30,000
• selling price per unit – £10
• variable cost per unit – £4

How many units must be produced and sold to cover fixed costs and make the desired profit?

Select ONE answer:

1. 12,000 units
2. 17,000 units
3. 18,000 units
4. 25,500 units

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 ==> £72K + £30k = £102k / (£10 – £4) ==> 17,000 units
3. Not correct
4. Not correct

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

A particular cost is classified as ‘semi-variable’.

Which effect will a 20% reduction in activity have on the unit cost?

Select ONE answer:

1. decrease by 20%
2. decrease by less than 20%
3. increase by 20%
4. increase by less than 20%

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

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The following information is given for Alex Ltd at 31 December 2020, who’s current ratio is calculated at 3.6: 1

• Average inventory – £12 000
• Accounts receivable – £4 000
• Accounts payable- £5 000

What was the value of inventory at 1 January 2020?

Select ONE answer:

1. £9,400
2. £10,000
3. £12,000
4. £14,000

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 ==>Current Ratio = CA / CL ==> (Inventory + AR) / AP ==> (X + £4k) / £5k. If average inventory is £12k, then total inventory is £24k. EOY Current ratio is therefore (£14k + £4k) / £5k = 3.6 : 1 ==> Thus opening inventory is £10k
3. Not correct
4. Not correct

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