Category: Accounting

A company makes 500 units and sells these units at £50 each.

The direct materials cost is £7,500, direct labour costs £2,500 and fixed overheads are £8,400.

How much profit will be made if the company increases the number of units to 600?

Select ONE answer:

1. £7,920
2. £9,600
3. £10,100
4. £11,600

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 – 500 * £60 = £30,000 – (600 * £20 TVC) – £8,400 ==> £9,600
3. Not correct
4. Not correct

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

When should a manufacturing company purchase its products from an outside supplier?

When the price is….?

Select ONE answer:

1. less than the selling price but more than the total cost.
2. less than the marginal cost of production.
3. less than the marginal cost of sales but more than the marginal cost of production.
4. less than the total cost but more than the marginal cost of sales.

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
3. Not correct
4. Not correct

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

The data is given for four products.

The fixed cost of each product will be incurred only if the product is made.

There is sufficient capacity in the factory to make only three of the product lines.

Which choice of products will give the greatest profit?

Select ONE answer:

1. 1, 2 and 3
2. 1, 2 and 4
3. 1, 3 and 4
4. 2, 3 and 4

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
3. Not correct
4. Not correct

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

A company has decided to increase its gearing.

By which method can this be achieved?

Select ONE answer:

1. increasing retained profits
2. issuing additional debentures
3. issuing new ordinary shares
4. redeeming debentures

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
3. Not correct
4. Not correct

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

A company has ordinary share capital of £5 million in shares of £0.50 and has the following results (£000s):

• operating profit before depreciation – 12 000
• depreciation – 1 500
• interest payable – 2 000
• preference dividends paid – 500

What is the company’s earnings per share for the period?

Select ONE answer:

1. £0.80
2. £0.85
3. £1.00
4. £1.70

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 – £12,000 – (1,500 + 2,000 + 500) = 8,000 / (5,000,000 * 2) = 80p per share
2. Not correct
3. Not correct
4. Not correct

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