Accounting Multiple Choice Question – 29 June 2023

Alex plc manufactures a product called The Milford.

Information for the last two years on The Milford is as follows:

Year 1

• variable unit costs £6.00
• fixed overheads per annum £24,000
• unit sales price £10

Year 2

• variable unit costs £7.00
• fixed overheads per annum £25,200
• unit sales price £10

In both years, production of the Milford has been at break-even level.

What is the increase in production in year 2 compared with year 1 of the Milford?

Select ONE answer:

1. £0.50
2. £0.83
3. £1.00
4. £1.50

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 – Y1 £24k / (£10 – £6) – – > Y2 £25.2k / £10 – £7 = 2,400 extra units
2. Not correct
3. Not correct
4. Not correct

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