Day: October 4, 2022

A company manufactures a single product with a selling price of £75 per unit.

The information in £000s shows the costs, based on sales and production volume of 8,000 units.

• prime costs – £158k
• variable manufacturing overheads – £74k
• fixed manufacturing overheads – £80k
• variable selling overheads – £20k
• fixed administration overheads – £100k

If absorption costing is applied, what is the gross profit on each unit sold?

Select ONE answer:

1. £21.00
2. £36.00
3. £43.50
4. £46.00

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 2

1. Not correct
2. Correct = £158k + £74k + £80k = £312k / 8,000 = £39 = = > £75 – £39 = £36
3. Not correct
4. Not correct

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