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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Which
of the following statements is true? a. | Total fixed costs increase or decrease in line with
activity | b. | Fixed costs per unit tend to remain unchanged despite changes
to activity levels | c. | Total variable costs increase or decrease in line with
activity | d. | Variable costs per unit increase or decrease in line with
activity | | |
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2.
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A
company manufactures 200,000 units of a product during an accounting period. Some of these units
remain unsold at the end of the period. Variable production costs are £1.75 per unit and fixed
production costs are £50,000. Variable selling costs are £0.30 per unit and fixed selling
costs are £20,000. The unsold units at the end of the accounting period should be valued
at: a. | £2.00 per
unit | c. | £2.05 per
unit | b. | £1.75 per
unit | d. | £2.40 per
unit | | | | |
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3.
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The
most common "principal budget factor" which acts as a constraint on a business during a
budget period is: a. | The availability
of finance | b. | The availability of skilled labour | c. | The availability
of raw materials | d. | Demand for the products or services provided by the
business | | |
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4.
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A
business budgets to sell 20,000 units of a product at £6 each. Actual sales are 21,000 units at
£6.20 each. The variances from budget were: a. | Overall £10,200 (favourable)
Price
£4,200 (favourable)
Volume £6,000 (favourable) | b. | Overall
£10,200 (favourable)
Price £4,000 (favourable)
Volume
£6,200 (favourable) | c. | Overall £10,200 (unfavourable)
Price
£4,200 (unfavourable)
Volume £6,000 (unfavourable) | d. | Overall
£6,200 (favourable)
Price £200 (favourable)
Volume
£6,000 (favourable) | | |
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5.
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Standard costs per unit of a product are:
- materials 5kg at
£7 per kg
- labour
2 hours at £10 per hour
- other direct costs £4
Actual output for a
budget period was 500 units. During this period, actual costs were:
- materials
£17,200
- labour
£10,370
- other
direct costs £2,050
The flexed budget for 500 units, the total actual costs and the total variances are: a. | Flexed budget
£29,500
Actual costs £29,620
Total variances
£120 | b. | Flexed budget £29,500
Actual costs
£29,620
Total variances £(120) | c. | Flexed budget
£10,500
Actual costs £29,620
Total variances
£(19,120) | d. | Flexed budget £10,500
Actual costs
£29,620
Total variances £19,120 | | |
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