G11Quiz 0324

When comparing with the previous year, a trader finds that his gross profit margin has increased and his trade receivables turnover has decreased. Which statement would explain this?

• He bought in bulk and passed the savings on to his customers who bought more.

• He offered more trade discount and more customers paid in cash.

• He raised his selling price and offered more cash discounts.

• He reduced his selling price to increase the total value of sales.

B Limited had credit sales for the year of $3,285,000 and trade receivables at year end of $405,000. The sales director believed that if cash discounts had been given, then trade receivables would have been $351,000. The allowance for irrecoverable debts would have been reduced by $9,000. What difference would the discounts have made to the trade receivables turnover?

• It would have been 5 days faster.

• It would have been 5 days slower.

• It would have been 6 days faster.

• It would have been 6 days slower.

A business makes wedding dresses. Each machinist is paid $30 a day and each supervisor $40 a day. Each supervisor can work with up to 10 machinists and each machinist can produce one wedding dress a day. If 95 wedding dresses a day are produced, what is the daily labour cost?

• $2850

• $3210

• $3230

• $3250

Which statement best describes variable costs?

• Costs that are the same in total up to a certain level then increase with output

• Costs that are the same in total over any output level

• Costs that are constant per unit as output increases

• Costs that increase per unit as output increases

P Limited makes wooden chairs at a unit cost of $70 each. It has received an order to produce a batch of 1000 wooden chairs with padded seats. This requires $6000 of additional materials, an extra 500 labour hours at $15 per hour and a $2000 increase in overheads. What is the cost of the batch?

• $13 500

• $15 500

• $83 500

• $85 500

Why would overheads be over absorbed?

• Overheads absorbed is less than overheads budgeted.

• Overheads absorbed is more than overheads budgeted.

• Overheads incurred is less than overheads absorbed.

• Overheads incurred is more than overheads absorbed.

A company makes one product with a selling price of $384 per unit. The costs are as follows: direct materials 4 kilos at $8 per kilo, direct labour 8 hours at $12 per hour, selling and distribution $40. The mark-up is 50%. What is the factory overhead absorption rate per labour hour?

• $3

• $5

• $11

• $22

Which statements about marginal costing are correct? 1. It enables a business to make the best use of its resources when there is a limiting factor. 2. It ensures that decisions taken are based upon the total cost of producing a product. 3. It takes into account apportionment of service costs to production cost centres. 4. It usually leads to a lower inventory valuation than absorption costing.

• 1 and 4 only

• 1, 2 and 4

• 2 and 3

• 3 and 4 only

A company makes and sells a single type of product. The budgeted information for 6000 units is as follows: Variable manufacturing costs: $90,000 Variable selling expenses: $6,000 Fixed manufacturing overheads: $54,000 Fixed administrative overheads: $21,000 The unit selling price is $40. How many units must the company produce and sell to achieve a target profit of $45,000?

• 3960

• 4125

• 4800

• 5000

The diagram shows a break-even chart. What does line XY represent?

• the break-even point revenue

• the margin of safety in terms of revenue

• the profit at break-even point

• the total contribution at break-even point