MATS Lesson 6 - Plenary

Absorption costing is the cost of producing one extra unit of output.

• True

• False

Total variable cost increases directly in relation to output?

• True

• False

You work for a company that makes bikes.

You have made 100 this week.

Costs are as follows:

Direct materials £4,000

Direct labour £5,000

Production overheads £5,000 (£2,000 of this is fixed)

Selling price is £200 per bike

Using marginal costing what is the marginal cost per bike?

• £140.00

• £80.00

• £120.00

• £70.00

You work for a company that makes bikes.

You have made 100 this week.

Costs are as follows:

Direct materials £4,000

Direct labour £5,000

Production overheads £5,000 (£2,000 of this is fixed)

Selling price is £200 per bike

Using marginal costing what is the contribution per bike?

• £140.00

• £80.00

• £120.00

• £60.00

You work for a company that makes bikes.

You have made 100 this week.

Costs are as follows:

Direct materials £4,000

Direct labour £5,000

Production overheads £5,000 (£2,000 of this is fixed)

Selling price is £200 per bike

Using marginal costing what is the Operating profit for the week?

• £6,000

• £8,000

• £20,000

• £11,000

You work for a company that makes bikes.

You have made 100 this week.

Costs are as follows:

Direct materials £4,000

Direct labour £5,000

Production overheads £5,000 (£2,000 of this is fixed)

Selling price is £200 per bike

Using absorption costing what is the total cost per bike?

• £140.00

• £14,000

• £12,000

• £120.00

You work for a company that makes bikes.

You have made 100 this week.

Costs are as follows:

Direct materials £4,000

Direct labour £5,000

Production overheads £5,000 (£2,000 of this is fixed)

Selling price is £200 per bike

Using absorption costing what is the operating profit for the week?

• £11,000

• £8,000

• £20,000

• £6,000