The Multiple Choice Questions Blog

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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The following figures are given for a factory’s overheads and machine hours worked.

• budgeted = machine hours – 122,000 hours & total overhead costs – £268,400 & overhead absorption rate – £2.20
• actual = machine hours – 116,000 hours & total overhead costs – £261,000 & overhead absorption rate – £2.25

What was the under- or over-absorption of overhead for the quarter?

Select ONE answer:

1. £5,800 under-absorbed
2. £5,800 over-absorbed
3. £7,400 under-absorbed
4. £7,400 over-absorbed

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 – (122,000 hours – 116,000 hours) = 6,000 hours * £2.20 = £13,2000 – (£268,4000 – £261,000)
2. Not correct
3. Not correct
4. Not correct

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

The following information is given for a business.

• Sales = £650 000
• Cost of Sales = £(502 000) = = > Stock 1 January £19 000 + Purchases £508 000 – Stock 31 December £25 000
• Gross Profit = £148 000

• Inventory turnover days – 16 days
• Trade receivables 31 December – £48,082
• Trade payables 31 December – £44,537

What is the working capital cycle?

Select ONE answer:

1. 11 days
2. 21 days
3. 43 days
4. 75 days

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 – Trade Receivable days + Inventory turnover days – trade payable days = 27 days + 16 days – 32 days
2. Not correct
3. Not correct
4. Not correct

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

A firm has £10,000 in the bank and buys inventory for £6,000 paying by cheque.

What will be the effect on its Current ratio and Liquid Capital ratio?

Select ONE answer:

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

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