Month: March 2022

Which statements describe the advantages to a business of using a budgetary control system?

1. Budget holders are accountable for controllable costs.
2. Costs are controlled by comparing their actual and budgeted levels.
3. The budget holders’ performance is measured on the quality of their output.

Select ONE answer:

1. 1 and 2
2. 1 only
3. 2 and 3
4. 2 only

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 1

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

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

A company has fixed costs of £8,000, which will only increase when production exceeds 40,000 units.

It makes and sells 20,000 units of a single product.

Each unit has a selling price of £10 and has a contribution to sales ratio of 40%.

By how much does the profit increase if it makes and sells 30,000 units?

Select ONE answer:

1. £32,000
2. £40,000
3. £92,000
4. £120,000

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 – £10 @ 40% = £4 * 10,000 units ===> £40,000
3. Not correct
4. Not correct

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

A business provided the following information per unit about a product.

• selling price – £20.00
• variable cost – £12.50
• fixed cost – £3.50

What is the contribution to sales ratio?

Select ONE answer:

1. 20%
2. 37.5%
3. 62.5%
4. 80%

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 – £20 – £12.50 = £7.5 / £20 ==> 37.5%
3. Not correct
4. Not correct

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

A business provided the following information about a product per unit.

• selling price – £15.00
• variable cost – £9.00
• fixed cost – £4.20

Budgeted production and sales were 1200 units.

What was the profit made for actual production and sales of 1500 units?

Select ONE answer:

1. £2,700
2. £3,960
3. £6,660
4. £9,000

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 – £15 – £9 – £4.2 = £1.8 * 1,200 units = £2,160 + (£15 – £9 * 300 units) = £3,960
3. Not correct
4. Not correct

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