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1. When units produced increase, total variable costs……… a) b) c) d) increase in propo
rtion to the units produced increase at a greater rate than units produced incre
ase at a lesser rate than units produced stay the same
2. As production increases, total fixed costs ……… a) b) c) d) increase in proportion t
o the units produced increase at a greater rate than units produced increase at
a lesser rate than units produced stay the same
3. When units produced increase, variable cost per unit……… a) b) c) d) increase in pro
portion to the units produced increase at a greater rate than units produced inc
rease at a lesser rate than units produced stay the same
4. As production increases, fixed cost per unit ……… a) b) c) d) decrease increase we c
an't tell stay the same
5. Which of the following would not be illustrated by the cost curve shown below
?
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a) b) c) d)
direct material cost per unit direct labor cost per unit fixed production cost p
er unit variable production cost per unit
6. Fixed cost per unit increases when a) Variable cost per unit increase b) Vari
able cost per unit decreases c) Production volume increases d) Production volume
decreases 7. Variable cost per unit a) a Varies when output varies b) b Remains
constant c) c Increases when output increases d) d Decrease when output decreas
es 8. Which of the followings is an example of fixed cost? a) a Direct material
cost b) b Works manager’s salary c) c Depreciation of machinery d) d Chargeable ex
penses 9. Which of the following costs would be most likely to be illustrated by
the cost curve?
a) b) c) d)
total material cost factory rent total wages cost telephone expense
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10. Which of the following represent the cost curve?
a) b) c) d)
direct material cost per unit direct labor cost per unit variable production cos
t per unit fixed production cost per unit
11. Which of the following best describes a fixed cost? A cost which: a) b) c) d
) represents a fixed proportion of total costs remains at the same level up to a
particular level of output has a direct relationship with output remains at the
same level when output increases
12. A business s telephone bill should be classified into which one of these cat
egories? a) b) c) d) Fixed cost Stepped fixed cost Semi-variable cost Variable c
ost
13. Which one of the following is a Period Cost? a) b) c) d) Raw Materials Direc
t Labor Variable Overhead Fixed Overhead
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14. A company makes computers. Which one of the following is likely to be a Vari
able Cost? a) b) c) d) The salary of the managing director The salary of the fac
tory manager The wages of shop floor workers paid by piece rate The Business rat
es of the factory
15. A company makes made to measure plastic windows and doors. Which one of the
following is likely to be a Fixed Cost? a) b) c) d) The cost of heating the fact
ory The labor cost of assembly The cost of the plastic Sales commission
16. For a boat building company, which one of the following is an indirect cost
to the product? a) b) c) d) The material cost of the engine The sub-contract cos
t of testing the seaworthiness of the ship The cost of buying a cutting machine
used on a number of the boats The material cost of the decking
17. For a plumber that repairs water pipes. Which one of the following is a dire
ct cost to the service he/she provides to a particular household? a) b) c) d) Pe
trol cost of visiting house Van insurance Public Liability Insurance Telephone R
ental
18. Direct material + Direct labor + direct expense = a) Factory cost b) Prime c
ost c) Production cost d) Total cost 19. Hire of special plant or machinery or t
otal for a particular job is an example of a) Production overhead b) Indirect ex
pense c) Direct expense d) Indirect expense
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20. The difference between selling price and marginal cost is called ___________
a) Cost of goods sold b) Profit c) Contribution d) Break-even point 21. Under m
arginal costing only ___________ are charged to operations, processes or product
s a) Variable cost b) Fixed cost c) Period cost d) None of above 22. Net profit
is equal to: a) Sales less cost of sales and operating expenses b) Gross profit
less operating expenses c) Sales less operating expense d) Both (a) & (b) 23. At
the end of the year, goods that are unsold are deducted from: a) Finished goods
b) Closing stock c) Cost of good sold d) Opening stock 24. The value of finishe
d goods inventory is calculated by which of the following formula? a) Cost of go
ods manufactured/ no. of units manufactured b) Closing finished goods units x co
st per unit c) Cost of goods available for sale x cost per unit d) None of above
25. Which of the following is the correct formula to calculate cost of sales? a
) Purchases – opening inventory – closing inventory b) Purchases + opening inventory
+ closing inventory c) Purchases – opening inventory + closing inventory d) Purch
ases + opening inventory – closing inventory 26. Consider the following data: Dire
ct Material = £4 per unit Direct Labor = £2 per unit
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Variable Overhead = £1 per unit Total Fixed overheads = £10,000 Number of units prod
uced = 2,500 units Under variable costing the variable cost per unit is: a) £11 b)
£6 c) £7 d) £9 27. Consider the following data: Direct Material = £4 per unit Direct La
bor = £2 per unit Variable Overhead = £1 per unit Total Fixed overheads = £10,000 Numb
er of units produced = 2,500 units Under variable costing the absorption cost pe
r unit is a) £11 b) £6 c) £7 d) £9 28. Under Variable Costing accounting, when stocks de
crease profits will be a) Greater than under Absorption Costing accounts b) Smal
ler than under Absorption Costing accounts c) The same d) We can’t tell 29. When o
pening stock is the same as closing stock a) Variable Costing profit > Absorptio
n Costing profit b) Absorption Costing profit > Variable Costing profit c) Absor
ption Costing profit = Variable Costing profit d) We can’t tell 30. Which is the c
orrect equation that calculates P (the net profit)? Selling Price per unit = £S Va
riable Cost per unit = £V Number of units sold = U units Total Fixed costs = £F a) P
= SV - F b) P = U (S – V) - F c) P = FS - V d) P = S (V – S)
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