Month: August 2022

The budget for a product is shown.

• unit sales 620 000
• selling price per unit – £31
• variable cost per unit – £16
• contribution per unit – £15
• fixed costs £7 500 000

If the fixed costs rise to £7 800 000, the selling price is reduced to £29 per unit, and the variable cost remains unchanged at £16 per unit, the sales are likely to reach 660 000 units.

By what percentage will the revised break-even point increase?

Select ONE answer:

1. 3.8%
2. 4.0%
3. 16.7%
4. 20.0%

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 ==> old = £7,500,000 / £15 = 500,000 units BEP ==> new = £7,800,000 / £13 new contribution per unit = 600,000 units which is a 20% increase.

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‘Contribution’ is an important feature of marginal costing.

How can the total contribution from a given activity be calculated?

Select ONE answer:

1. total assets plus total fixed costs
2. total sales minus total profit
3. total fixed costs plus total profit
4. total direct costs minus total profit

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.

What is the reason for overhead absorption in a manufacturing business?

Select ONE answer:

1. to enable overheads to be apportioned to cost centres
2. to control overhead expenditure
3. to establish costs per unit of product
4. to establish the net realisable value of stock

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.