85 Questions
| Total Attempts: 1015

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Questions and Answers

- 1.The ratio of production volume to total variable costs in company X is as follows Production Variable Costs (in units) (in euros) 60.000 240000 62.000 254000 64.000 272000 This is an example of:
- A.
Regressively variable costs

- B.
Proportionally variable costs

- C.
Progressively variable costs

- D.
Step costs

- 2.The activity of a business increases over a given period. This results in:
- A.
An increase in the variable costs per unit

- B.
An increase in the total variable costs

- C.
A decrease in the variable costs per unit

- D.
No change to the variable costs per unit

- 3.Proportionally variable costs per unit remain the same with:
- A.
An increase in activity

- B.
A decrease in production levels

- C.
A and B

- D.
Neither A nor B

- 4.If operating activity fluctuates within the relevent production range:
- A.
The total fixed costs remain the same

- B.
The total variable costs remain the same

- C.
Both A and B

- D.
Neither A nor B

- 5.On a cost-volume-profit analysis graph, the x-axis (horizontal axis) contains the following information:
- A.
The total revenue

- B.
The total costs

- C.
Production and sales

- D.
The periods

- 6.A theatre booking agency has commissioned a famous pop band to perform a one-off concert for 12,500. The price of the admission is 35; tickets can only be purchased from approved retail outlets, which receive a 5% commission on the selling price per ticket sold. The hire fee for the venue is 2,000 plus 1,25 per visitor. The other fixed costs are 5,500. How many tickets does the agency need to sell to break even?
- A.
563

- B.
593

- C.
602

- D.
625

- 7.A trading company imports article A for 2,50 per unit and sells it for 10. The fixed costs of this company are 25,000 per month. What is the envisaged annual turnover to achieve a pre-tax profit of 150,000 a year?
- A.
500,000

- B.
600,000

- C.
750,000

- D.
800,000

- 8.An estate agent has an average commission rate of 1,8% of the total sale vale. The fixed costs are 150,000 a year, variable costs are (on average) 0,2% of the sale value. The break-even turnover (total sale value) is:
- A.
7,500,000

- B.
8,333,333

- C.
9,375,000

- D.
10,000,000

- 9.Product A is sold for 45. The variable costs are 18 and the fixed costs are 4,50 per unit. The contribution margin of this product is:
- A.
60%

- B.
50%

- C.
22,50

- D.
90%

- 10.Company X sells a product for 29; its forecast profit this year is 1,000,000 at a turnover level of 7,250,000. The total variable costs have been budgeted at 2,250,000. The break-even sales volume is:
- A.
112,500 units

- B.
200,000 units

- C.
312,500 units

- D.
400,000 units

- 11.The break-even turnover level will fall as a result of:
- A.
An increase in the sold quantity

- B.
An increase in the variable costs per unit

- C.
An increase in the contribution margin

- D.
An increase in turnover

- 12.If a company's total contribution margin over a certain period is equal to the total fixed costs for that period, it has achieved:
- A.
A break-even result

- B.
A volume variance of 0

- C.
A margin of safety of precisely 100%

- D.
A loss equal to the total variable costs

- 13.Corporation ABC manufactures product X; the cost per unit of 12 is made up of 4 fixed costs and 8 variable costs. The total fixed costs over a certain period are 24,000; the total variable costs are 52,000. The selling price is constant at 15 per unit and all 6,500 manufactured products are sold. What is the break-even sales volume of ABC over that period?
- A.
3,000 units

- B.
3,429 units

- C.
6,000 units

- D.
8,000 units

- 14.Corporation ABC manufactures product X; the cost per unit of 12 is made up of 4 fixed costs and 8 variable costs. The total fixed costs over a certain period are 24,000; the total variable costs are 52,000. The selling price is constant at 15 per unit and all 6,500 manufactured products are sold. What is the operating income (profit) of ABC over that period?
- A.
19,500

- B.
21,500

- C.
23,500

- D.
25,500

- 15.
- A.
14,875

- B.
16,250

- C.
16,958

- D.
17,750

- 16.A London hotel has 75 rooms. The price per room is 150 a night (including a buffet breakfast). The variable costs (cleaning costs, laundry costs, etc.) are 30 per room night. The fixed costs for the coming year have been budgeted at: 1,150,000 for personnel costs, 275,000 for deprecation costs and 300,000 for other costs (excluding interest charges). The interest charges for the coming year are 165,000, requiring principal repayments of 180,000 How many room nights need to be booked for the coming year to achieve an after-tax profit (corporate tax = 35%) of 6,5% of the turnover?
- A.
17,687

- B.
18,572

- C.
18,714

- D.
20,286

- 17.Bike manufacturer Union has managed to lower its break-even point this year from 130,000 bicycles to 100,000 bicycles. The margin of safety this year is therefore:
- A.
30.000 bicycles

- B.
In percentage terms, lower than last year

- C.
Not accepted

- D.
Partly dependent on the forecast sales volume

- 18.A trading company forecasts an annual turnover of 8,200,000. The contribution margin is estimated at 39% of turnover. All operating costs are fixed. The pre-tax profit is budgeted at 148,000. The break-even turnover (rounded to the nearest 1,000) is:
- A.
7,821,000

- B.
7,957,000

- C.
8,052,000

- D.
8,443,000

- 19.A company will suffer a negative volume variance if the actual volume:
- A.
Deviates from the normal volume

- B.
Is less than the capacity

- C.
Is higher than the normal activity

- D.
Is lower than the normal activity

- 20.Fixed costs are included in the cost per unit on the basis of:
- A.
The budgeted volume

- B.
The normal volume

- C.
The actual volume

- D.
The average of normal and budgeted volume

- 21.Business A has estimated its total production for the coming period at 17,500 units. The fixed costs are 1,400,000 and the budgeted variable costs for this period are 700,000. The normal volume per period is 20,000 units. The full production cost per unit and the expected volume variance are:
- A.
110 and 175,000 loss

- B.
110 and 200,000 loss

- C.
120 and 175,000 loss

- D.
120 and 200,000 loss

- 22.In the last quarter, the fixed manufacturing costs of corporation X were 1,000,000 and the (proportionally) variable costs 720,000. The normal annual production and sales are 160,000 units, spread evenly over four quarters. The actual production during the last quarter was 45,000 units, 42,000 of which were sold at a price of 50 each. The operating profit in this quarter was:
- A.
378,000

- B.
405,000

- C.
503,000

- D.
530,000

- 23.Under the direct costing method, period costs consist of:
- A.
Fixed production costs

- B.
Fixed sales and general costs

- C.
Both A and B

- D.
Neither A nor B

- 24.Under the direct costing system, the following are charged to profit and loss account over a certain period:
- A.
All variable costs incurred during that period, including those relating to products not yet sold

- B.
All fixed costs incurred during that period, including those relating to products not yet sold

- C.
Only the variable costs of all products sold

- D.
Both the variable and fixed costs of all products sold

- 25.Last month, company X made a profit of 50,000 under the direct costing method. The opening inventory was 13,000 units, and the closing inventory 18,000 units. According to the absorption costing method, the fixed production costs are 2 per product. Under absorption costing, the profit or operating profit last month was:
- A.
36,000

- B.
40,000

- C.
60,000

- D.
76,000