Multiple Choice
Identify the
letter of the choice that best completes the statement or answers the question.
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1.
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Management accounting provides information which helps managers to
determine: a. | The price which
should be charged for a product or service | b. | The cost of making a product or providing a
service | c. | Whether or not to invest in new
equipment | d. | All of the above | | |
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2.
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Which
of the following is true? a. | Within certain limits, fixed costs remain the same regardless
of the level of activity | b. | Fixed costs rise or fall in line with the level of
activity | c. | Fixed costs always remain exactly the same, regardless of the
level of activity | d. | Fixed costs would increase by 10% if the level of activity rose
by 10% | | |
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3.
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The
variable cost of a product is £1.50 per unit. Fixed costs are £10,000 per annum. The total
cost per unit at an output level of 8,000 units per annum is: a. | £1.25 | c. | £2.75 | b. | £1.50 | d. | £2.30 | | | | |
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4.
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The
term "contribution" means: a. | Revenue minus fixed costs | c. | Revenue minus total costs | b. | Revenue minus
variable costs | d. | Fixed costs
minus variable costs | | | | |
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5.
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An
item is bought for £10 and sold for £16. The gross profit margin is:
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6.
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The
break-even point is the level of sales at which: a. | Revenue equals fixed costs | c. | Revenue equals total costs | b. | Revenue equals
variable costs | d. | A profit is
made | | | | |
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7.
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A
graph of fixed costs (the dependent variable) against total output (the independent variable) would
show: a. | A horizontal
line | c. | A sloped
straight line | b. | A vertical line | d. | A curved line | | | | |
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8.
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A
business calculates its break-even point for a product as 10,000 units but actually achieves sales of
12,500 units. The margin of safety is: a. | 2,500 units | c. | 20% | b. | 25% | d. | 125% | | | | |
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9.
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A
business which is running at full capacity is producing and selling 100,000 units per annum. The
variable cost per unit is £1 and fixed costs are £50,000 per annum. Output and sales could
be increased by 20,000 units if further fixed costs of £22,000 per annum were incurred. The
marginal cost of the extra 20,000 units is: a. | £0.60 per unit | c. | £1.60 per unit | b. | £1.10 per
unit | d. | £2.10 per
unit | | | | |
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10.
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An
employee is employed in the marketing department of a business at an annual salary of £15,000.
The employee also receives a £1 bonus for each customer order that he obtains. The employee's
remuneration is an example of: a. | A variable cost | c. | A fixed cost | b. | A semi-variable
cost | d. | A stepped fixed
cost | | | | |
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