Tag: Absorption Costing

Accounting Multiple Choice Question – 19 October 2023

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

Photo by Pixabay on Pexels.com

Alex Trading Ltd provides the following data for the year:

  • budgeted output (units) – 10,000 units
  • actual output (units) – 8,000 units
  • budgeted fixed production costs – £1,200,000
  • budgeted variable production costs – £800,000
  • budgeted fixed selling overhead – £600,000

What is the absorption cost per unit used for stocktaking?

Select ONE answer:

  1. £200
  2. £250
  3. £260
  4. £325

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 == > £1,200k + £800k / 10,000 units
  2. Not correct
  3. Not correct
  4. Not correct

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

Accounting Multiple Choice Question – 18 October 2023

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

Photo by Olya Kobruseva on Pexels.com

What is a benefit of using absorption costing?

Select ONE answer:

  1. It allows a business to calculate the break-even point for production.
  2. It allows a business to calculate the total cost of goods produced.
  3. It allows a business to calculate the profit to be made on a product.
  4. It allows decision-making on utilising spare capacity by increasing production.

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

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

Accounting Multiple Choice Question – 21 August 2023

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

Photo by Pixabay on Pexels.com

Alex plc uses a predetermined direct labour rate of £5.40 per hour to absorb production overhead.

Each unit of product manufactured requires four direct labour hours

The following information is available for a period.

  • actual production overhead – £518,400
  • under-absorbed production overhead – £32,400

What was the actual output of the product in the period?

Select ONE answer:

  1. 22,500 units
  2. 24,000 units
  3. 25,500 units
  4. 30,000 units

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 – £518,400 – £32,400 = £486,000 / £5.4 = 90,000 hours / 4 = 22,500 units
  2. Not correct
  3. Not correct
  4. Not correct

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

Accounting Multiple Choice Question – 7 August 2023

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

Photo by Pixabay on Pexels.com

When valuing stocks of finished goods on an absorption cost basis, which costs should be included?

Select ONE answer:

  1. production
  2. production and administration
  3. production, marketing and distribution
  4. production, marketing, administration and distribution

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
  2. Not correct
  3. Not correct
  4. Not correct

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

Accounting Multiple Choice Question – 30 June 2023

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

apple devices books business coffee
Photo by Serpstat on Pexels.com

The table shows figures for a week’s production of The Milford.

  • expected production – 10,000 units
  • expected production overhead – £50,000
  • actual production overhead – £60,000
  • under-absorption of overhead – £5,000

What is the actual amount of production in the week of The Milford?

Select ONE answer:

  1. 9,000 units
  2. 9,167 units
  3. 11,000 units
  4. 13,000 units

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 – £50,000 / 10,000 = £5 per unit = = > Actual production overhead £60,000 means a difference of £10,000 but and under-absorption of £5,000. Therefore £5,000 difference / £5 = 1,000 extra units of actual production.
  4. Not correct

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