Day: February 13, 2023

The data relates to two different levels of output in a Alex plc’s finishing department:

• machine hours – Level 1 – 16 000 & Level 2 – 20 000
• Overheads – Level 1 £214,000 & Level 2 – £230,000

What is the amount of fixed overheads?

Select ONE answer:

1. £16,000
2. £64,000
3. £150,000
4. £198,000

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 3

1. Not correct
2. Not correct
3. Correct – 20,000 – 16,000 = 4,000 == > £230k – £214K = £16k / 4,000 = £4 per hour. 16,000 * 4 = £64k == > Therefore £214k – £64k variable overheads = £150k fixed overheads
4. Not correct

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