A Level Accounting Multiple Choice Questions 3

Which formula is used to calculate the overhead absorption rate?

• Actual overheads / actual activity

• Actual overheads / budgeted activity

• Budgeted overheads / actual activity

• Budgeted overheads / budgeted activity

Which one of the following is not an example of a cost driver in activity based costing?

• Number of direct labour hours

• Number of machine set-ups

• Number of production runs

• Number of quality inspections

A business is considering investing in new machinery. The machinery will cost £850 000. The cash flows are shown below and are assumed to accrue evenly during the year.

Year 1 Cash inflow £450 000 Cash Outflow £200 000

Year 2 Cash Inflow £650 000 Cash Outflow £200 000

Year 3 Cash Inflow £650 000 Cash Outflow £200 000

What is the payback period for the machine?

• 1 year 89 days

• 1 year 324 days

• 2 years 33 days

• 2 years 122 days

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

• The amount of the discounted return on an investment

• The amount of the discounted value of inflows from an investment

• The investment required to produce a positive return on an investment

• The rate to produce a positive return on a proposed investment

Standard cost is best defined as which of the following?

• The actual unit cost of a product produced in a period of time

• The actual average unit cost of a product produced in a period of time

• The planned unit cost of a product produced in a period of time

• The planned average cost of a product produced in a period of time

The following information is available for the sale of Product X for June 2016. Standard selling price per unit £26.00

Budgeted sales 8400 units

Actual sales 8600 units

Actual sales revenue £219 300

What is the sales price variance for June 2016?

• £4300 Adverse

• £4300 Favourable

• £5200 Adverse

• £5200 Favourable