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    Finance and accounting multiple choice questions

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    16 Which of the following may be used to smooth distributable profits from one year to another?
    A asset revaluation reserve
    B capital redemption reserve
    C general reserve
    D provisions for depreciation

    17 A company makes three products for which the following details are given.
    Product P Product Q Product R
    $ $ $
    Selling price per unit 20 24 36
    Direct Material per unit 9 12 15
    dirrect labour per unit 5 3 9

    The same material is used by all three products and it costs $3.00 per kilo. There is a shortage of material. In which order of priority should the products be made in order to achieve maximum profit from the available material?
    First Next Last
    A P Q R
    B Q R P
    C R P Q
    D R Q P

    18 For what purpose might management undertake sensitivity analysis?
    A to calculate employees' bonuses
    B to determine levels of depreciation
    C to determine the effect of dividends on profit
    D to determine the selling price of a product

    19 A company manufactures one product. It has variable costs of $600 000 and fixed costs of If it bought all its production from another supplier, it could use its existing machinery to make a total contribution of $400 000. Fixed costs would not change. What is the maximum price it should pay to obtain all its production from another supplier?
    A $600 000 B $700 000 C $900 000 D $1 000 000

    20 A company makes a product for which the following information is given.

    _________________ Per unit
    selling price 100
    direct materials 40
    direct labour 30
    Total fixed costs are $40 000.
    Planned production is 1000 units.
    Which action should the company take to break-even?
    Decrease Cost Of increase Cost OF
    A direct labour 30%
    B direct material 25%
    C direct labour 30%
    D direct materials 25%

    21 At the beginning of a given period the value of work-in-progress was $1 1 000. The unit costs of production for the period were:

    5
    8.5
    At the end of the period work-in-progress consisted of 700 units which were complete as to 80% of materials and 50% labour.
    What was the change in the value of the work-in-progress during the period?

    decrease Increase
    $ $

    A 1550
    B 1550
    C 5225
    D 5225

    22 Which of the following should be considered by a manufacturer before deciding to buy-in its products instead of manufacturing them?
    A administration expenses
    B alternative use of resources formerly used for production
    C contribution to sales ratio
    D marketing expenditure

    23 Which of the following is an advantage of using a budgetary control system?
    A calculation of bad debt provisions
    B calculation of depreciation
    C making 'make or buy' decisions
    D monitoring management performance

    24 A company's debtors total $27 000. There is a collection period of 30 days. The budget for the coming year provides for an increased turnover of 50 % with the relevant collection period being increased to 60 days. What will the year-end debtors be?
    A $81 000 B $54000 C $40500 D $36000

    25 A company has a standard selling price of $12 per unit and budgeted sales of 80 000 units It has actual sales of 82 000 units with a total sales value of $955 300. What is the sales price variance?
    A $4700 adverse
    B $24 000 adverse
    C $24 000 favourable
    D $28 700 adverse

    26 The table shows details of direct labour costs.
    Budget Actual
    48250 hours at $6.50 per hours 50000Hours at $7.00 per hours
    What is the direct labour rate variance?
    A $24 125 adverse
    B $24 125 favourable
    C $25 000 adverse
    D $25 000 favourable

    27 The following material costs relate to the manufacture of 100 units of a product.
    . Kilos Cost per unit Total cost

    standard 1500 5.5
    actual 1650 9570

    What is the raw material price variance?
    A $495 adverse
    B $495 favourable
    C $1320 adverse
    D $1320 favourable

    28 What is the net present value of an investment equal to when the internal rate of return is calculated?
    A the aggregate anticipated future cash income at compound interest
    B the initial expenditure on the investment
    C the value of the investment's depreciation
    D zero

    29 What i an advantage of using pay back method of capital investment appraisal?
    A calculates higher purchase instalments
    B calculates profitability
    C determines the efficiency of a process
    D evaluates risk

    30 A company converts $2 000 000 debenture stock into $0.50 ordinary shares. The conversion rate is 40 ordinary shares per $100 debenture stock. What amount is credited to the Share Premium account?
    A $800 000 B $1 000 000 C $1 200 000 D $1 600 000

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    https://brainmass.com/business/finance/finance-and-accounting-multiple-choice-questions-9906

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    16 Which of the following may be used to smooth distributable profits from one year to another?
    A asset revaluation reserve
    B capital redemption reserve
    C general reserve
    D provisions for depreciation

    17 A company makes three products for which the following details are given.
    Product P Product Q Product R
    $ $ $
    Selling price per unit 20 24 36
    Direct Material per unit 9 12 15
    dirrect labour per unit 5 3 9
    Contribution 6 9 12

    Contribution per kilo of material= 2 2.25 2.4
    lowest highest

    The same material is used by all three products and it costs $3.00 per kilo. There is a shortage of material.
    In which order of priority should the products be made in order to achieve maximum profit from the available material?
    First Next Last
    A P Q R
    B Q R P
    C R P Q
    D R Q P Answer

    18 For what purpose might management undertake sensitivity analysis?
    A to calculate employees' bonuses
    B to determine levels of depreciation
    C to determine the effect of dividends on profit
    D to determine the selling price of a product

    19 A company manufactures one product. It has variable costs of $600 000 and fixed costs of

    If it bought all its production from another supplier, it could use its existing machinery to make a
    total contribution of $400 000. Fixed costs would not change.
    What is the maximum price it should pay to obtain all its production from another supplier?
    A $600 000 B $700 000 C $900 000 D $1 000 ...

    Solution Summary

    Answers to Finance and accounting multiple choice questions

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