Accounting Multiple Choice Question – 13 November 2017

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

Which one of the following is not an example of a cost driver in activity based costing?

Select ONE answer:

  1. Number of boxes of finished goods shipped
  2. Number of direct labour hours
  3. Number of machine set-ups
  4. Number of production runs
  5. Number of quality inspections

Explain and define activity-based costing?……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This is multiple choice question is suitable for Accounting KS5 classes.

The answer is 2 – An activity cost driver is a factor that influences or contributes to the expense of certain business operations. In activity-based costing (ABC), an activity cost driver drives the costs of labor, maintenance or other variable expenses. Cost drivers are essential in ABC, a branch of managerial accounting that allows managers to determine the costs to perform an activity at various activity levels. The most common cost driver has historically been direct labor hours. Expenses incurred relating to the layout or structure of a building or warehouse may utilize a cost driver of square footage to allocate expenses. More technical cost drivers include machine hours, the number of change orders, the number of customer contacts, the number of product returns, the machine setups required for production or the number of inspections.

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Accounting Multiple Choice Question – 12 November 2017

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

Which formula is used to calculate the overhead absorption rate?

Select ONE answer:

  1. Actual overheads / actual activity
  2. Actual overheads / budgeted activity
  3. Budgeted overheads / actual activity
  4. Budgeted overheads / budgeted activity
  5. Budgeted overheads / managed activity

What is the purpose of the overhead absorption rate?……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This is multiple choice question is suitable for Accounting KS5 classes.

The answer is 4 – Overhead absorption rates are our attempt at coming up with the best ‘guess’ of how much overhead should be given to a product. In traditional costing systems, the rates are likely to be based on machine hours or labour hours. The process is a little more refined in activity based costing, but the intention is still the same: we are trying to find an equitable way of sharing out the overheads to products and are therefore looking for a method that relates the absorption base to the incidence of the overheads (establish a ‘causal link’). If a business is machine intensive, machine hours would be the most appropriate base as the overheads would be related to machine usage. But this is taking a very wide view: it would be better to break the business down into separate departments and choose individual rates for each department. In order for the business to move along and not wait a full year before it can sell its products we need to forecast the overheads and forecast the total hours to be used when making all of our products (assuming a traditional system), in other words we work with budgeted figures when calculating the overhead absorption rates. The formula to use is Overhead absorption rate = budgeted overhead/budgeted activity.

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Economics Multiple Choice Question – 11 November 2017

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

The price elasticity for a product is -2.5. The firm sells 2,000 units. What would you expect the new sales to be following a 10% price increase?

Select ONE answer:

  1. 1,500
  2. 2,000
  3. 2,500
  4. 2,200
  5. 1,800

Show your workings to arrive at your answer, and explain and justify your reasons?
……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This is multiple choice question is suitable for Economics KS5 classes.

The answer is 1 – Normal formula is PED = % change QD / % change P. We know PED = -2.5 & % change in P is 10%. Substituting in this formula we know -2.5 = -x% / 10% where needs to be a higher % therefore this must be -25% / 10% to equal -2.5. 25% of 2,000 units sold is 500 units. 500 less units sold from a 10% increase in price means 2,000 – 500 i.e. new quantity sold will be 1,500 units.

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Economics Multiple Choice Question – 10 November 2017

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

Price elasticity of demand measures?

Select ONE answer:

  1. % change in quantity demanded compared to % change in price
  2. % change in quantity supplied compared to % change in price
  3. % change in price compared to % change in supply
  4. % change in quantity demanded compared to % change in income
  5. % change in quantity demanded compared to % change in advertising

Explain what is meant by price-inelastic demand:
……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This is multiple choice question is suitable for Economics KS5 classes.

The answer is 1 – The price elasticity of demand measures the sensitivity of the quantity demanded to changes in the price. Demand is inelastic if it does not respond much to price changes, and elastic if demand changes a lot when the price changes. Necessities tend to have inelastic demand.

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Economics Multiple Choice Question – 9 November 2017

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

Demand for a good is said to be effective only when it is associated with?

Select ONE answer:

  1. Knowledge of the characteristics of the good
  2. Willingness and ability to pay for the good
  3. Consumer expenditure
  4. Sufficient disposable income to pay for the good
  5. The existence of an adequate supply of the good

What are the determinants of supply?
……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This is multiple choice question is suitable for Economics KS5 classes.

The answer is 2 – At first glance all these answers might seem reasonable. Look at 1 – People do indeed make better choices when they are well informed about a good, but you don’t effectively purchase just because you know about it. Now look at 4 – Having sufficient disposable income (after tax) is essential but not sufficient, as you may not like the good at all but if you have sufficient income and are willing to pay for it, then the demand is effective. But we haven’t mentioned 5 – If the good isn’t supplied consumers can’t purchase, but its provision isn’t sufficient to make consumers purchase. 3 – is a pure distraction.

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