Contribution_analysis - Contribution analysis Multiple...

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Contribution analysis Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. ____ 1. Marginal costing is useful for which important management accounting function? a. Control c. Budgeting b. Planning d. Decision-making ____ 2. Which one of the following descriptions of contribution is correct? Contribution = a. Revenue – fixed costs c. Revenue – variable costs b. Revenue – total costs d. Revenue – semi-variable costs ____ 3. Which of the following statements about contribution are correct? A. If contribution is a positive figure it contributes, first, to covering fixed costs, and second, to profit. B. In order to calculate contribution it is necessary first to split costs into fixed and variable a. Both of them c. B only b. A only d. Neither of them ____ 4. Snafu Productions Limited incurs the following costs in producing 60 items of product during July 20X6: £ Direct materials 1250 Factory heating and lighting 600 Factory rental 810 Supervisory salaries 900 Direct labour 1360 Cleaners’ wages 300 Other fixed factory costs 1020 There was no opening or closing stock: all 60 units of product were sold in the month, at a selling price of £121 each. What was the contribution per unit of product in July 20X6? a. £17.00 c. £57.50 b. £77.50 d. £34.00 ____ 5. Kumar Products Limited manufactures an industrial grade floor polish which it sells in 5kg tubs. Each tub sells for £26.50. Direct materials per tub cost £3.20 and direct labour costs £2.90. Factory production overhead is recovered on the basis of direct labour hours. Each tub of product requires 20 minutes of direct labour input, and the recovery rate per labour hour is £31.74. What is the contribution per tub of polish? a. £20.40 c. £25.64 b. £9.82 d. £14.05 ____ 6. Slatter and Higson Limited manufactures a standard model of vacuum cleaner. The selling price of each cleaner is £135. Variable costs of manufacture are £52.50. During its 20X8 financial year the company expects to incur fixed production costs of £80 000 and fixed selling and administration overheads of £32 000. 1
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How many vacuum cleaners will the company have to sell in order to break-even (to the nearest whole unit)? a. 970 c. 2133 b. 1358 d. 1524 ____ 7. Springer and Leghorn Limited manufactures a standard model of trouser press. The selling price of each trouser press is £89. Variable costs of manufacture are £27.75. During its 20X2 financial year the company expects to incur fixed production overheads of £79 500 which will be absorbed per unit of production. The budgeted production volume is 3000 units. The company expects to incur selling and administrative overheads of £58 300. What is the expected break-even point in sales value in 20X2 (working to the nearest whole unit)?
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This note was uploaded on 03/28/2011 for the course MN 1015 taught by Professor Evangelos during the Spring '08 term at Royal Holloway.

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Contribution_analysis - Contribution analysis Multiple...

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