IB Business Management MCQ QuizIB_Business_Management_Contributi

Identify the method used to calculate contribution per unit.

• Average variable costs – Price

• Price – Average fixed costs

• Price – Average variable costs

• Total fixed costs / (Price – Average variable costs)

A firm sells bottled water for $1 per bottle. It sells 200,000 bottles per month, with fixed costs of $110,000 and variable costs of $0.20 per unit. Calculate the contribution per unit.

• $0.80

• $1.00

• $1.20

• $1.40

A glass manufacturer sells glass panels for $40 each. It sells 4,000 panels per month, with fixed costs of $60,000 and total variable costs of $52,000. Calculate the contribution per unit.

• $20

• $25

• $27

• $40

A confectionary company sells chocolate bars for $1.50 each. It sells 11.2 million bars per year, with fixed costs of $6 million and variable costs of $0.80 per unit. Calculate the total annual profit or loss for the firm.

• ($2.96 million)

• $1.84 million

• $2.96 million

• $10.8 million

A school district can make 2,000 school desks for $30 per desk plus $30,000 in fixed costs. Alternatively, it can buy the desks from a supplier at a price of $50 per desk. Calculate the school district’s cost to make and its cost to buy.

• $75,000 to make, $120,000 to buy

• $90,000 to make, $100,000 to buy

• $100,000 to make, $90,000 to buy

• $180,000 to make, $189,000 to buy

An instrument manufacturer has been asked for 2,500 brass instruments with a special type of paint. The paint can be made in-house for $30 per instrument, but machine upgrades of $25,000 would be required. Alternatively, the firm can purchase the paint for $32 per instrument from a specialist manufacturer. Calculate the cost saving of buying the paint.

• $6

• $300

• $3,000

• $20,000

Identify the key factor(s) for a firm to consider when choosing to make a component part, rather than buying it.

• i + ii + iii

• i + ii + iii + iv

• ii + iii

• iii + iv

Identify the accounting term used for costs that cannot be linked to the production of an individual unit.

• Direct costs

• Indirect costs

• Overheads

• (B) and (C)

Identify the term used for analysing the relationship between selling price and direct costs across a product portfolio.

• Absorption costing

• Cost focus

• Cost of sales

• Contribution costing

Identify the term used for applying the overhead and direct costs to the products within a portfolio using a measure of proportion.

• Absorption costing

• Cost focus

• Cost of sales

• Contribution costing