Accounting Multiple Choice Question – 21 November 2017

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

The following information is available for Product Z.

Table 18

What would be the difference between the profit for the month using absorption costing and the profit for the month using marginal costing?

Select ONE answer:

  1. Absorption costing profit would be £500 lower
  2. Absorption costing profit would be £1,500 higher
  3. Absorption costing profit would be £1,500 lower
  4. Absorption costing profit would be £3,000 higher
  5. Absorption costing profit would be £3,000 lower

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

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

The answer is 2 – There has been an increase of 50 units in inventory. Each one has absorbed £30 of overhead (£5*6 hours) which means that £1,500 of extra profit in the month will have been generated by an increase in current assets.

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Accounting Multiple Choice Question – 20 November 2017

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

The following information is available for the single product manufactured by a business.

Table 17

How many units must the business sell to produce an annual profit of £80 000?

Select ONE answer:

  1. 7,477 units
  2. 14,036 units
  3. 15,888 units
  4. 29,825 units
  5. 38,555 units

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

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

The answer is 3 – The contribution per unit is £10.70. If you multiply it by 15,888 units the contribution is £170,001.60 which if you take away the £90,000 of fixed costs leaves you with an annual profit of £80,000. The budgeted production information is a distraction.

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Accounting Multiple Choice Question – 19 November 2017

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

The following budgeted information is available for Product Y for August 2016.

Table 16

How many kg of material will be purchased during July 2016?

Select ONE answer:

11,200 kg
13,000 kg
15,200 kg
17,000 kg
21,000 kg

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

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

The answer is 3 – We assume that the business purchased at least the quantity required to make the budgeted sales i.e. 3,000 * 5kg or 15,000 kg. The increase in finished goods inventory would necessitate in theory 400 units * 5 kg of extra purchases or 2,000 kg making a total of 17,000 kg. However, the decrease in raw material inventory of 1,800 kg means that the actual purchases of the month would be 17,000 kg – 1,800 kg = 15,200 kg.

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Accounting Multiple Choice Question – 18 November 2017

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

A business operates a system of absorption costing. The business apportions factory administration overheads to the four departments: Cutting; Welding; Finishing and Stores based on the number of employees in each department.

Table 15

The factory administration overheads are forecast to be £175 770.

How much of the factory administration overheads will be apportioned to the Finishing department?

Select ONE answer:

  1. £12,555
  2. £37,655
  3. £43,942
  4. £58,590
  5. £65,940

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

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

The answer is 2 – the total number of employees in the business are 70 (25+20+15+10). Finishing makes up 15/70 or 21.43% which multiplied into the administration overhead of £175,770 equals £37,665.

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Accounting Multiple Choice Question – 17 November 2017

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

The following information is available for the sale of Product X for June 2016.

Table 14

What is the sales price variance for June 2016?

Select ONE answer:

  1. £4,300 adverse
  2. £4,300 favourable
  3. £5,200 adverse
  4. £5,200 favourable
  5. £6,500 adverse

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

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

The answer is 1 – Actual sales revenue divided by actual units sold of 8.600 gives us an average sales price of £25,50, which is 50p less than the standard selling price of £26. The sales price variance, therefore, equals £0.50 * 8,600 or £4,300 which is adverse as the actual sales price achieved of £25.50 is 50p lower than the standard price set in the budget for the month.

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Accounting Multiple Choice Question – 16 November 2017

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

Standard cost is best defined as which of the following?

Select ONE answer:

  1. The actual unit cost of a product produced in a period of time
  2. The actual average unit cost of a product produced in a period of time
  3. The planned unit cost of a product produced in a period of time
  4. The planned average cost of a product produced in a period of time
  5. The variable unit cost of a product produced in a period of time

What are the advantages and disadvantages of standard costing?
……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

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

The answer is 3 – A standard cost has been described as a predetermined cost, an estimated future cost, an expected cost, a budgeted unit cost, a forecast cost, or a “should be” cost. Standard costs are often a part of a manufacturer’s annual profit plan and operating budgets. Standard costs will be established for the following year’s direct materials, direct labour, and manufacturing overhead.

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Accounting Multiple Choice Question – 15 November 2017

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

Which best describes the net present value method of investment appraisal?

Select ONE answer:

  1. The profit from an investment equal to the initial outlay
  2. The amount of the discounted return on an investment
  3. The amount of the discounted value of inflows from an investment
  4. The investment required to produce a positive return on an investment
  5. The rate to produce a positive return on a proposed investment

What are the advantages and disadvantages of the NPV method?
……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

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

The answer is 2 – Net present value (NPV) is determined by calculating the costs (negative cash flows) and benefits (positive cash flows) for each period of an investment. After the cash flow for each period is calculated, the present value (PV) of each one is achieved by discounting its future value at a periodic rate of return (the rate of return dictated by the market). NPV is the sum of all the discounted future cash flows. Because of its simplicity, NPV is a useful tool to determine whether a project or investment will result in a net profit or a loss. A positive NPV results in profit, while a negative NPV results in a loss. The NPV measures the excess or shortfall of cash flows, in present value terms, above the cost of funds. In a theoretical situation of unlimited capital budgeting, a company should pursue every investment with a positive NPV.

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