opening inventory on 1 January 16 items at $525 each

receipts on 3 January 24 items at $675 each

issues on 5 January 28 items
10
The business uses the AVCO method to value inventory.

27 What
A manufacturing business
was the value of has two
closing inventory onproduction
7 January? departments: assembly and painting.
MARGINAL  COSTING    
  AThe$6300 B $7200 is available.
following information C $7380 D $8100

Q1.  
assembly
25 A business entered into a contract for the support of its computer systems. There painting
was an annual
fee of $5000 plus a charge of $30 per hour for solving computer problems. At the end of the year
machinery
the cost of computer at net $11
support totalled book value ($)
330. 150 000 100 000
machinery
Which type of cost was this? repair costs ($) 14 000 6 000
A fixed machine operating hours 60 000 15 000
B semi-variable
number of machines 30 10
C stepped
Thevariable
D total machinery insurance cost for the year was $5000.
 
  How much insurance should be apportioned to the assembly department?
26 (Nov   16  /13/Q25)  
A business absorbs overheads on the basis of direct labour hours. The following information is
  A $3000
available. B $3500 C $3750 D $4000
Q2.  
  budgeted labour hours 6600 hours
actual labour hours 7100 hours
28 Which costs will change with an increase in activity?
budgeted overheads $75 900
A unit fixed costs and total fixed costs
actual overheads $74 250
B unit fixed costs and total variable costs
What is the value of overheads over or under absorbed?
C $5625
A
unit fixed
over
costs and unit variable costs
D $5625
B unit variable
under costs and total variable costs
 
  C $7400 over
29 (Nov   16  /under
The$7400
D table 13/Q28)  
shows figures for a week’s production.
 
Q3.   11
expected production 10 000 units
30 A business makes a single product. The following information is available.
expected production overheads $50 000
actual production total cost
production overheads $60 000
$
under absorption of overheads $5 000
600 units 4200
© UCLES 2016 9706/13/O/N/16 [Turn over
What is the actual amount of 800 units
production in the5200
week?
What9000
A is the units
fixed cost per
B unit?
9167 units C 11 000 units D 13 000 units

for 600 units for 800 units

$ $

A 2.00 1.50
B 2.00 2.00
C 5.00 5.00
D 7.00 6.50
 
 
(Nov  16  /13/Q30)  

© UCLES 2016 9706/13/O/N/16

 1 March purchased 1000 units at $65 per unit
The following transactions took place.
2 March purchased 1200 units at $66 per unit
4 March sold 1850 units at $68 per unit
1 March purchased 1000 units at $65 per unit
What was the value of 2closing
Marchinventory?
purchased 1200 units at $66 per unit

  A $22 750 $22 941 sold 1850

B 4 March $23 100
C units at $68 perDunit$23 800

Q4.  
What was the value of closing inventory?
23 A manufacturing company employs 20 workers who are paid a basic rate of $30 per hour for a
A40-hour week. To meet
$22 750 a special
B $22 941 order,Cthe$23 workers
100 each worked
D $2350 hours and were paid a
800
premium of 40% over basic rate for the overtime.

23 AWhat was the value

manufacturing of wages
company paid to 20
employs meet the special
workers 9 order?
who are paid a basic rate of $30 per hour for a
40-hour week. To meet a special order, the workers each worked 50 hours and were paid a
A $30 000 B $32 400 C $33 600 D $42 000
25 premium of 40% overbusiness
In a manufacturing basic ratethe
forfollowing
the overtime.
could occur.  
  What was the value of wages paid to meet the special order?
24 (Nov   16  1/12/Q23)  
A manufacturingActual overheads
business paidoperating
is currently are less at
than
full budgeted
capacity. overheads.

  AAs part
$30 000
of2 an Actual
expansion
$32 400 paid are
Boverheads $33than
C more
programme to increase
600 budgeted $42 000
D overheads.
production capacity, the business intends to
Q5.  
employ an additional factory supervisor.
3 Actual units produced are less than budgeted units.
24 A manufacturing business is currently operating at full capacity.
How are total supervisory salaries classified?
4 Actual units produced are more than budgeted units.
As
A part
fixedofcost
an expansion programme to increase production capacity, the business intends to
employ an additional
Which situations factory
would supervisor.
result in an under absorption of overhead expenditure?
B semi-variable cost
How
A are total
1 and 3 supervisory
B salaries
1 and 4classified?
C 2 and 3 D 2 and 4
C stepped cost
AD fixed cost
variable cost
26 BA company makes
semi-variable and sells a single product for $12 per batch.
cost
CThestepped
variablecost
cost is $4 per batch.
variable
DFixed costscost
have been absorbed based on a normal activity level of 1000 batches at
 
© UCLES 2016 9706/12/O/N/16
$3 per batch.
(Nov  16  /12/Q24)  
  What is the profit under marginal costing if the company makes and sells 1500 batches?
  A $6000
© UCLES 2016
B $7500 C $9000
9706/12/O/N/16
D $12 000
Q6.  
 
27 The following information was provided about a product.

selling price per unit $50

variable cost per unit $26
total fixed costs $10 000
demand 1800 units

If the selling price increases only demand changes.

When the selling price increased by $4 profit fell by $1200.

What was the decrease in demand?

A 214 units
B 300 units
C 571 units
D 657 units
 
 
(Nov  16  /12/Q27)  
 

© UCLES 2016 9706/12/O/N/16 [Turn over

 10
Q7.  
28 A business that uses flexible budgets shows the following:
10
units of output 100 000 110 000
28 A business that total
uses fixed
flexible
andbudgets shows
variable coststhe following:
$400 000 $425 000

What are fixed units

costs?of output 100 000 110 000

A $125 000 total fixed and variable

B $150 000 costs
C $250$400
000 000 D $425
$275000
000
 
  What are fixed costs? 8
29 (Nov   16  /12/Q28)  
A company makes a product for which the following information is given.
23   A manufacturer operates a bonus system. He provides the following information.
A $125 000 B $150 000 C $250 000 D $275 000

Q8.   per unit

29 A company makes a output
productrequired fromthe
for which each worker information
following 175
$ units is given.
time allowed to complete
selling priceoutput 10.5
100 hours
per unit
actual time worked by Fred 7 hours
direct materials $40
A bonus is paid of 25% of the labourdirect
costs labour
for time saved, in addition
30 to the hourly rate of $8.75.
selling price 100
What did Fred earn for his output ofdirect
175 units?
materials 40
Total fixed costs are $40 000.
A $68.91 B $76.56 directClabour
$91.88 D $99.53
30
Planned production is 1000 units.

24 Total
A potential
Which
fixed investor looks
costs are
action should
$40at000.
the financial
the company takestatements of four companies. Their income statements
to break-even?
all show the same level of revenue and profit from operations. The cost of purchasing inventory is
increasing.
Planned
A production
decrease directislabour
1000 cost
units.by 30%

Which company
B decrease
action 1 uses
direct
should theAVCO
material to value
cost
company inventory
by 25%
take to break-even?
C
A company
increase
decrease 2 uses
direct
direct FIFO
labour to value
cost inventory
by 30%
B
D company
decrease
increase 3 uses
direct
direct absorption
material
materialscost costing
costbyby25%
25%
company 4 uses marginal costing
C increase direct labour cost by 30%
The increase
investor wishes
direct to invest in cost
materials companies with the best underlying profitability.
30 D
What is the objective of a system by 25%
of budgetary planning and control?
Which companies should he select?  
(Nov  
A to16   /12/Q29)  
determine next year’s production
A 1 and 3 B 1 and 4 C 2 and 3 D 2 and 4
30   What
B toisdetermine
the objective
nextofyear’s
a system of budgetary planning and control?
profits
Q9.  
25 A
A company
C to is classifying
to determine
motivate next
the its costs.
year’s It discovers
production
manufacturing staff that for any level of output between 10 000 and
15 000 units the freight cost per unit is always the same figure of $2 per unit.
B
D to
to determine next year’s
provide a system profits
for communication, coordination and control
Of which
C type of cost
to motivate is this an example?
the manufacturing staff
A
D fixed cost a system for communication, coordination and control
to provide
B semi-variable cost
C stepped fixed cost
D variable cost
 
 
26 (Nov  
When1does
6  /11/Q25)  
under absorption of overheads occur?
 
1 Actual expenditure is less than budgeted.
 
2 Actual expenditure is more than budgeted.
© UCLES 2016 9706/12/O/N/16
3 Production is lower than planned.
4 Production is higher than planned.
© UCLES 2016 9706/12/O/N/16

A 1 and 3 B 1 and 4 C 2 and 3 D 2 and 4

27 The following information is available in respect of department 1.
27 The following information is available in respect of department 1.
The company has been asked to quote for an order. The expected time taken in department 1 will
be four direct labour hours and seven machine hours. actual forecast

direct labour hours 45 000

actual
40 000
forecast
How much overhead should be charged to the order as it passes through department 1?
direct labour
machine hours hours 12 000 45 000
10 000 40 000
A $8.00 B $9.00 C $52.50 D $63.00
Q10.   overheads
machine to be apportioned to department 1
hours $90 000 10 000
12 000
 
The
28 A company
business overheads to abe
has been asked
manufactures apportioned
to quote
single for anto
product. department
order.
The 1
The expected
following time taken
information $90 000 1 will
in department
is available.
be four direct labour hours and seven machine hours.
The company has been asked to quote for an order. The expected time taken in department 1 will
How much overhead estimated
be four direct labourshould
hoursbeand
charged
seventomachine
the orderthis
as year
it passes through
hours. department 1?
next year
$
A $8.00 B $9.00 C $52.50 D $63.00$
How much overhead should be charged to the order as it passes through department 1?
selling price per unit 25 25
A business
28 A B a $9.00
$8.00 manufactures C following
single product. The $52.50informationDis available.
$63.00
variable cost per unit 15 17
total fixed costs 80 000 estimated
84 000
this following
28 A business manufactures a single product. The year information
next year is available.
profit for the year $ 000
20 $
estimated
sellingbeprice
How many units must soldper unit
to achieve this year
25
the same profit next year?25next year
$
variable cost per unit 15 17 $
A 10 000 B 10 500 C 12 500 D 13 000
total fixed costs 80 000 84 000
 
  selling price per unit 25 25
29   A company wants profit for the
to sell year units and achieve
50cost
000 20 000a profit
variable per unit 15 of $600 000. It17has variable costs of
$60 per
(Nov   1 unit
6   / and total fixed overheads of $400 000.
11/Q28)  
How many units must be fixed sold tocosts
achieve the same profit80
next
000year?
  What is the selling total
price per unit it needs to charge?
84 000
A 10 000
Q11.   B 10
profit the year C 12 500 20 000
for500 D 13 000
  A $64 B $68 C $72 D $80
How
29 A many wants
company units must
to sellbe
50sold
000 to achieve
units the same
and achieve profit
a profit of next
$600year?
000. It has variable costs of
$60 per unit and total fixed overheads of $400 000.
30 A
A business
10 000manufactures
B several
10 500 products. C
There
12is500
a shortage ofDdirect
13 materials.
000
What is the selling price per unit it needs to charge?
Which product will it manufacture first?
29 A $64
A company wantsBto sell C and
$68 50 000 units D $80
$72achieve a profit of $600 000. It has variable costs of
A the one with the highest contribution per unit of limiting factor  
$60 per unit and total fixed overheads of $400 000.
 
30 B the onemanufactures
A business with the highest demand
several products. There is a shortage of direct materials.
(Nov  
What1is6  the
/11/Q29)  
selling price per unit it needs to charge?
C the one with the lowest quantity of total direct materials used
  Which product will it manufacture first?
A $64 B $68 C $72 D $80
Q12.  
D the one with the lowest variable costs
A the one with the highest contribution per unit of limiting factor
 
B the one with the highest demand
30 A business manufactures several products. There is a shortage of direct materials.
C the one with the lowest quantity of total direct materials used
Which
© UCLES 2016 product will it manufacture first?9706/11/O/N/16
D the one with the lowest variable costs
A the one with the highest contribution per unit of limiting factor
B the one with the highest demand
C 2016
© UCLES the one with the lowest quantity of total direct materials used
9706/11/O/N/16

D the one with the lowest variable costs

 
(Nov  16  /11/Q30)  
 
 
© UCLES 2016 9706/11/O/N/16
 
 
 
 
 
 X only trades with businesses with a trade payables turnover of 42 days or less.
A both G and H

WithG which
B only business(es) did X decide to trade?
C H only
A both G and H
D neither G nor H
B G only
Q13.  
Cbusiness
24 A H onlypays its employees $2 for each unit of X they assemble and $3.20 for each unit of Y.
Monthly output is 1800 units of X and 1000 units of Y. The factory supervisor is paid $1000 per
D neither G nor H
month.
10
What is the direct labour cost per month?
26
24 AA Abusiness
businessincurs theemployees
pays Bits following costs.
$2Cfor$7800
each unit of D
X they assemble and $3.20 for each unit of Y.
$6800 $7760 $8760
Monthly output is 1800 units of X and 1000 units of Y. The factory supervisor is paid   $1000 per
  month. 1 direct material and direct labour costs
25   A garage owner paid the following costs.
2 indirect factory production overheads
(June16   /13/Q24)  
What is1the direct labour
mechanics’ cost per month?
wages
  3 administrative expenses
A $6800
Q14.   B $7760
2 garage equipment repairs C $7800 D $8760
4 distribution costs
  3 spare parts used to repair vehicles
25 Which
A garage
4 owner
costs paid
arepaid
rent the following
included costs.
in premises
for garage the cost per unit using absorption costing?
Which
A 1
1,of2,these mechanics’
are
3 and 1wages
4directBcosts?and 2 only C 1 only D 2, 3 and 4 only
A 1, 2, 3 and 4
2 garage equipment repairs
B 1, 2 and 3 only
3 absorbs
27 A company spare parts used tousing
overheads repair vehicleshours. The following information is available.
machine
C 1 and 3 only
D 4 onlyrent paid for garage premises
2 and 4
overheads machine hours
Which of these are direct costs?
budgeted $200 000 40 000 hours
A 1, 2, 3 and 4
actual $240 000 60 000 hours
B 1, 2 and 3 only
What was the over or under absorption of overheads?
C 1 and 3 only
A $40 000 over
D 2016
© UCLES 2 and 4 only 9706/13/M/J/16 [Turn over
B $40 000 under  
 
(June16   /13/Q25)  
C $60 000 over
 
D $60 000 under
 
Q15.  
28 How is margin of safety calculated?

A actual sales minus break-even sales

© UCLES 2016 9706/13/M/J/16 [Turn over
B actual sales minus budgeted sales
C actual sales minus cost of sales
D budgeted sales minus cost of sales
 
 
29 (June16  
A company incurs total costs of $2200 for producing 100 units and $4600 for 300 units. The
/13/Q28)  
  selling price per unit is $20.
  What is the total profit or loss at a production level of 200 units?
 
  A $400 loss
 
B $600 profit
C $933 profit
D $1600 profit
28 How is margin of safety calculated?

A actual sales minus break-even sales 7

19 BA company
actual sales
wantsminus budgeted
to increase its sales
return on capital employed in the short term.
CWhich
actual sales
course ofminus
actioncost of sales this?
will achieve
D budgeted sales minus cost of sales
Q16.  
A invest in new plant and machinery
  B make a bonus issue of shares
29 A company incurs total costs of $2200 for producing 100 units and $4600 for 300 units. The
selling
C reduceprice per unit is expenses
overhead $20.

What is the total

D reduce profit or loss
the dividends atto
paid a production
investors level of 200 units?

A $400 loss
20 Which item is included in the current ratio but not the liquid (acid test) ratio?
B $600 profit
A cash at bank
C $933 profit
B inventory
D $1600 profit
C trade payables
 
(June16  
D trade /receivables
13/Q29)  
 
© UCLES 2016 9706/13/M/J/16
21   A business has prepared the following information for the year ended 30 April 2015.
11
Q17.  
30 A company provides the following information in respect
$ of its carriage
$ costs.
revenue 220 000
total cost
units
opening carried
inventory 25 000 $
purchases 2 000 120 0006 000

5 000
closing inventory 13 500
(31 000)
cost of goods sold 114 000
When more than 5000 units are carried the cost will increase the fixed charge by a further $2000.
gross profit 106 000
What will be the cost to carry 6000 units?
What was the inventory turnover?
A $15 500 B $16 200 C $18 000 D $20 000
 
A 86 days

  B 90 days
(June16   /13/Q30)  
C 95 days
 
  D 100 days
Q18.  
22 An employee works a standard 40-hour week. In that time he is expected to make 200 complete
units.

He is paid a bonus of $10 for every hour saved in production.

For week 25 he worked 44 hours and produced 250 units.

How much was his bonus payment for week 25?

A $30 B $40 C $50 D $60

 
 
© UCLES 2016 9706/12/M/J/16 [Turn over
(June16  /12/Q22)  
 
 
 
 
 
 
 A $3000 over
B $3000 under
C $13 000 over
D $13 000 under
Q19.  
26 Why might a business use marginal costing?

1 to calculate break-even units

2 to decide on the most profitable use of limited resources
3 to decide whether to make a product or buy it

A 1 and 2 only B 1, 2 and 3 C 2 only D 3 only

 
 
(June16  /12/Q26)  
 
 
© UCLES 2016 9706/12/M/J/16

Q20.  
9

27 A business provided the following information for the past two months.

number of total overheads

month
labour hours $

February 64 000 918 000

9
March 76 000 1 062 000
27 A business provided the following information for the past two months.
What was the monthly fixed overhead cost?
number of total overheads
A $144 000 month
B $150 000 C $768 000 D $912 000
labour hours $
 
 
February 64 000 918 000
28   A company uses marginalMarch costing.76 000 1 062 000
(June16  
What was
/the
12/Q27)  
monthly fixed overhead cost?
Which costs are included in its inventory valuation?
 
  A
A $144 000 manufacturing
variable B $150 000 C $768
cost, fixed 000
manufacturing $912 000and variable selling expenses
Doverhead
Q21.  
B variable manufacturing cost and fixed manufacturing overhead only
28 A company uses marginal costing.
C variable manufacturing cost and variable selling expenses only
Which costs are included in its inventory valuation?
D
A variable
variable manufacturing
manufacturing cost,cost
fixed only
manufacturing overhead and variable selling expenses
B variable manufacturing cost and fixed manufacturing overhead only
Thevariable
29 C break-even sales ofcost
manufacturing a company areselling
and variable 1000expenses only the variable costs are $30 000 and fixed
units when
costs are $20 000.
D variable manufacturing cost only
What is the profit if 70 units above the break-even point are sold?  
29   The break-even sales of a company are 1000 units when the variable costs are $30 000 and fixed
(June16  
A $700
costs /12/Q28)  
are $20 000. B $1400 C $2100 D $3500
 
30   Who should be on the budget committee?
What is the profit if 70 units above the break-even point are sold?

  A $700 B $1400 C $2100 D $3500

  A accounting and finance staff only
30   Who should be on the budget committee?
  B sales manager and production manager only
A accounting and finance staff only
C sales staff only
B sales manager and production manager only
D senior management representing every department in the organisation
C sales staff only
D senior management representing every department in the organisation
 The following
24 Which information is available.
costs are included in its inventory valuation?

A budget
variable manufacturing cost, fixed manufacturing actual
overhead and variable selling expenses
B variable manufacturing cost and fixed manufacturing overhead only
overheads $60 000 $66 000
C variable manufacturing cost and variable selling expenses only
  direct labour 30 000 hours 35 000 hours
Q22.  
D variable manufacturing cost only
  The overhead absorption rate is based on direct labour hours.
9 when the variable costs are $30 000 and fixed
29 The break-even sales of a company are 1000 units
Whatare
costs is the amount of overhead over-absorbed or under-absorbed?
$20 000.
26 A business produces and sells watches. In 2015, 4000 watches were produced and 3600
A $4000
watches
What
wereover
sold.
is the profit
Other information for the year included the following:
if 70 units above the break-even point are sold?

B
A $4000 under B
$700 $1400 C $2100 D $3500
$ per unit
 
C $6000 over
30  Who should be on the budget
directcommittee?
materials 60
(June16  
D $6000 /12/Q29)  
under direct
stafflabour 80
 
A accounting and finance only

Q23.   variable selling

B sales manager and production expenses
manager only 15
A particular
25 C sales staffcost
only is classified as ‘semi-variable’.
fixed manufacturing overheads 45

What
D effect
senior will a 20%
management fixed administrative
reduction
representing every costs
in activity haveinon
department thethe 50
unit cost?
organisation

What is the costby

A decrease of goods
20% sold for 2015 if the business uses absorption costing?
A
B $558 000 by less
decrease B $666
than 000
20% C $720 000 D $740 000

C increase by 20%
27 Which items are included in the marginal cost of a unit of production?
D increase by less than 20%
A direct labour, direct materials, fixed production costs and variable production overheads  
 B direct labour, direct materials, fixed costs and variable production overheads
(March  16  /12/Q25)  
 C direct labour, direct materials and variable production overheads only
Q24.  
D direct labour and direct materials only
 
28 Which statements about cost-volume-profit analysis are correct?
© UCLES 2016 9706/12/M/J/16

1 Profits are calculated on an absorption costing basis.

2 Profits are calculated on a marginal costing basis.
3 It only applies where there is a constant sales mix.
© UCLES 2016 9706/12/F/M/16
4 It only applies where there is a changing sales mix.

A 1 and 3 B 1 and 4 C 2 and 3 D 2 and 4

 
 
(March  16  /12/Q28)  
 
 
 
 
 
 
 
 
 
 

© UCLES 2016 9706/12/F/M/16 [Turn over

22 During the year ended 31 March 2015, a business made sales of $560 000 of which 25% were for
Itcash. The trade
then issues receivables
50 000 at 31
new ordinary March
shares of 2014 were
$1 each at a$52 000 and
premium at 31 per
of $0.10 March 2015 they were
share.
$56 000.
What is the new current ratio?
What is the trade receivables turnover based on average trade receivables?
A 2.25 : 1 B 2.28 : 1 C 2.67 : 1 D 2.76 : 1
A 34 days B 36 days C 47 days D 49 days

22 Q25.  
During the year ended 31 March 2015, a business made sales of $560 000 of which 25% were for
23 cash. The trade
The following receivables
information at 31toMarch
relates 2014 were $52 000 and at 31 March 2015 they were
a product.
$56 000.
$
What is the trade receivables turnover based on average trade receivables?
fixed costs 72 000
A 34 days B 36 days C 47 days D 49 days
required profit 30 000
selling
23 The following information relates price per unit
to a product. 10
variable cost per unit 4
$
How many units must be produced and sold to cover fixed
fixed costs costs and make the required profit?
72 000
A 12 000 required profit 30 000
B 17 000 selling price per unit 10
9
C 18 000 variable cost per unit 4
25 A
D company
25 sells a single product for $24 per batch.
500units
How many must be produced and sold to cover fixed costs and make the required profit?
 
(Nov15   /13/Q23)  
AThe12variable
000 cost is $8 per batch.

  BFixed
24 A company has sales of $192 000, fixed costs of $40 000 and a contribution / sales ratio of
17 000
costs have been absorbed based on a normal activity level of 1000 batches at $6 per
one-third.
  batch.
  What are its profits?
C 18 000

Q26.  
DWhat25is
A $24 000
the profit under marginal costing if the company makes and sells 1250 batches?
500
B $50 667 C $64 000 D $88 000
  A $10 000 B $12 500 C $14 000 D $20 000
24 A company has sales of $192 000, fixed costs of $40 000 and a contribution / sales ratio of
one-third.
26 The following information is forecast for next period.
What are its profits?
opening inventory 20 300 units
A $24 000 B $50 667 C $64 000 D $88 000
closing inventory 22 500 units
marginal cost profit $90 600  
 
(Nov15  /absorption
13/Q24)  
cost profit $100 400

  What is the overhead absorption rate per unit?

© UCLES 2015 9706/13/O/N/15

 
Q27.  
A $4.03 B $4.45 C $4.46 D $4.95
 
27 A business is considering disposing of a non-current asset.
© UCLES 2015 9706/13/O/N/15

Which type of cost is the asset’s book value?

A fixed
B semi-variable
C stepped
D sunk
 
(Nov15  /13/Q27)  
28   A company has total fixed costs of $100 000 and a break-even point of 4000 units. Variable costs
  per unit are $40. It produced and sold 10 000 units.
  How much is revenue per unit?

A $25 B $35 C $65 D $75

 increase
27 ADbusiness by twice disposing
is considering the valueofofa the invoice asset.
non-current

Which type of cost is the asset’s book value?

17 Which item may appear in the manufacturing account of a business?
A fixed
carriage inwards
BA semi-variable
 
 CB stepped
carriage outwards
Q28.  
DC sunk
discounts allowed
 
D discounts received
28 A company has total fixed costs of $100 000 and a break-even point of 4000 units. Variable costs
per unit are $40. It produced and sold 10 000 units.
Inventory
18 How is valued at the lower of cost and net realisable value.
much is revenue per unit?

AWhat
$25is net realisable
B $35value? C $65 D $75

A selling price
 
 
B selling price less cash discount
(Nov15   /13/Q28)  
C selling price less further cost to completion
 
 
D selling price less trade discount

Q29.  
19 A trader runs a manufacturing business.

Which department should it close?

© UCLES 2015 9706/13/O/N/15 [Turn over
A department 1 where contribution exceeds fixed costs
B department 2 where contribution is less than fixed costs
C department 3 where revenue exceeds marginal costs

 
D department 4 where revenue is less than marginal costs
 
(Nov15/12/Q19)  
  9
Q30.  
24 A customer places an order for 20 000 bricks.

Which costing method will the supplier use to price the order?

A batch
B job
C marginal
© UCLES 2015 9706/12/O/N/15 [Turn over
D unit
 
 
25 (Nov15/12/Q24)  
Which item is classed as a direct cost?
 
  A administration costs
  B carriage inwards
 
  C carriage outwards
  D supervisor’s salary
 
 
26 A business sells its product for $50 a unit and has variable costs of $30 per unit. Its fixed costs for
this year were $200 000. Next year, fixed costs are expected to be $260 000.

How many more units will have to be sold next year to make the same profit as this year?

A 3000 B 5200 C 10 000 D 13 000

 batch
AA batch
job
BB job 9

24 CA marginal
C customer places an order for 20 000 bricks.
marginal
D unit
 DWhich
unit
costing method will the supplier use to price the order?

Q31.  
A batch
Which
25 Which
25 B itemisisclassed
jobitem classedasasa adirect
directcost?
cost?

AC marginal
administrationcosts
A administration costs
D unit
carriageinwards
BB carriage inwards
CC carriage
carriageoutwards
outwards
25 Which item is classed as a direct cost?
D supervisor’s
DA supervisor’ssalary
salary
administration costs
 
(Nov15/12/Q25)  
B carriage inwards
26  AC
26 Abusiness
carriagesells
business sellsitsitsproduct
outwards productforfor$50
$50aa unit and
unit andhas variable
has costs
variable of $30
costs of $30 perper
unit. Its fixed
unit. costs
Its fixed for for
costs
 this year were $200 000. Next year, fixed costs are expected to be
this year were $200 000. Next year, fixed costs are expected to be $260 000. $260 000.
Q32.  
D supervisor’s salary
 How
Howmany
manymore
moreunits
unitswill
willhave
havetotobebesold
soldnext year
next to to
year make thethe
make same
same profit as this
profit year?
as this year?
26 A business sells its product for $50 a unit and has variable costs of $30 per unit. Its fixed costs for
AA 30003000 B 5200 C C 1010000 D D 13 000
this year were $200 000.BNext5200
year, fixed costs are 000to be $260
expected 000.13 000

How many more units will have to be sold next year to make the same profit as this year?
27 AA manufacturer
27 manufacturerproduces
produces100100000
000tins
tinsof ofpaint
paintwith
witha total direct
a total materials
direct costcost
materials of $300 000.000.
of $300
A 3000
Direct labour is B hours
2000 10 000
5200 at a cost Cof $400 000, and D 13 000 are absorbed at the rate of $100
overheads
Direct labour is 2000 hours at a cost of $400 000, and overheads are absorbed at the   rate of $100
per direct labour hour.
(Nov15/12/Q26)  
per direct labour hour.
 What
27 A manufacturer produces 100 000 tins of paint with a total direct materials cost of $300 000.
Directis the cost of ahours
tin of paint?
What labour
is the iscost
2000 cost of $400 000, and overheads are absorbed at the rate of $100
of a tinatofapaint?
  per direct labour hour.
Q33.  
A $3
A $3
B $5
B $5
C
C
$7
$7
D
D
$9
$9
  What is the cost of a tin of paint?

$3
28 AAbusiness $5 following information.
B the
provides C $7 D $9
28 A business provides the following information.
28 A business provides the following information.
number of total overheads
month number of total $overheads
month machine hours
machine
number of hours
total overheads $
month
August machine hours
72 000 $ 842 000
August 72 000 842 000
September
August 84 000
72 000 842 000938 000
September 84 000 938 000
September 84 000 938 000
The variable overhead rate per machine hour was $8.
Thevariable
The variable overhead
overhead rate rate per machine
per machine hour
hour was $8. was $8.
What was the monthly fixed cost?
Whatwas
What wasthethe monthly
monthly fixedfixed
cost?cost?
A $96 000 B $266 000 C $576 000 D $672 000
A $96000
A $96 000 B B $266$266
000 000 C $576 C 000$576 000
D $672 000
D $672 000
 
 
(Nov15/12/Q28)  
 
  2015
© ©UCLES
UCLES 2015 9706/12/O/N/15
9706/12/O/N/15 [Turn over [Turn over
 
© UCLES 2015 9706/12/O/N/15 [Turn over
 
 
 
 
 
 break-even
point
Y
$
M X
W
Q34.   9

26 Which line represents total cost?

O
units Z

A OW B OZ break-even
C MX D MY
point
Y
27 A company makes one product with a selling price of $384 per unit. Costs are as follows.
$
M per unit X
W
direct materials 4 kilos at $8 per kilo
direct labour 8 hours at $12 per hour
O distribution
units
selling and $40

The mark up is 50%.

 
A OW B OZ C MX D MY
  What is the factory overhead absorption rate per labour hour?
27  AAcompany
$3 makes oneB product
$5 with a selling
C $11 price of $384 per
D unit.
$22 Costs are as follows.
(Nov15/11/Q26)  
Q35.   per unit
28 A business provides the following information for August.
direct materials 4 kilos at $8 per kilo
$
direct labour 8 hours at $12 per hour
actual
selling and revenue
distribution 340 000
$40
break-even10 revenue 370 000
The mark up is 50%.
forecast
29 A company’s profit for a period using revenue
marginal costing was 365 000
$70 000.
What is the factory overhead absorption rate per labour hour?
Opening
What wasinventory wasof2000
its margin units
safety in and closing inventory 2500 units.
August?
A $3 B $5 C $11 D $22
AThe +$25
fixed production
000 overhead
B –$25absorption
000 rate
C is +$30
$10 per
000unit. D –$30 000
What was the profit under absorption costing?
28 A business provides the following information for August.  
(Nov15/11/Q28)  
A $50 000 B $65 000 C $75 000 D $90 000
Q36.   $
30 A business sold 10 000 units at $20 each. It had fixed costs of $15 000. Costs per unit of
production were as follows. actual revenue 340 000
break-even revenue 370 000
$
© UCLES 2015 forecast revenue
9706/11/O/N/15 365 000 [Turn over
direct materials 7
directinlabour
What was its margin of safety August? 5
variable production overhead 3
A +$25 000 B –$25 000 C +$30 000 D –$30 000
variable sales overhead 2

What was the contribution?

A $15 000 B $30 000 C $35 000 D $50 000

 
(Nov15/11/Q30)  
© UCLES 2015 9706/11/O/N/15 [Turn over
 1 3 Inventory
Profit of
margin on a
goods has constant
decreased in level
relationoftosales has
units sold. decreased.
2 4 Inventory
Profit of
margin on a
goods has constant
increased level of
in relation to sales has
units sold. increased.
3 Profit margin on a constant level of sales has decreased.
A 1 and 3 B 1 and 4 C 2 and 3 D 2 and 4
4 Profit margin on a constant level of sales has increased.

22   The break-even chart for a product is shown.

A 1 and 3 B 1 and 4 C 2 and 3 D 2 and 4
Q37.  
22 The break-even chart for a product is shown. sales
sales
revenue
revenue

total costs
break-even total costs
costs and
costs and
break-even
point
revenues
revenues
point
$000$000
X X

Y
sales volume
Y
sales volume
What does XY represent? 9
What does
A fixed costsXY represent?
24 Which cost relating to a manufacturing business is apportioned between its cost centres?
B gross profit
A
A fixed costs of delivery vehicles
depreciation
C profit for the period
B
B gross profit
factory power
D variable costs  
  C
C finance
profit forcosts
the period
23   D raw
Which materials
business would use a job costing system?
variable costs
(June15/13/Q22)  
D

25 Q38  
A a chemical plant
A company absorbs overheads on the basis of machine hours, which are budgeted at 11 250.
B a retailer of food
23 The budgeted
Which business overhead is $281
would use 250.
a job costing system?
C a ship builder’s yard
Results show actual
A a chemical planthours of 10 980 and overhead of $276 652.
D a wholesaler of car parts
What
B aisretailer
the under or over absorption?
of food
$2152
A 2015
a ship over absorbed
© UCLES 9706/13/M/J/15
C builder’s yard
B $2152 under absorbed
D a wholesaler of car parts
C $4598 over absorbed
 
(June15/13/Q23)  
D $4598 under absorbed

Q39.  
© UCLES 2015 9706/13/M/J/15

26 A manufacturing company uses the reducing balance method to calculate depreciation.

What describes the depreciation expense?

A fixed cost
B semi-variable cost
C stepped cost
D variable cost

 
(June15/13/Q26)  
 
   11
Q40.  
29 The following information is available.

$ $

sales 250 000

variable production costs 150 000
fixed production costs 30 000 180 000
gross profit 70 000
fixed administrative costs 50 000
profit for the year 20 000

What is the break-even point?

A $100 000 B $170 000 C $200 000 D $230 000

 
 
(June15/13/Q29)  
30 The following forecasted data relates to the month of January 2015.
 
 
$
Q41.  
 
10
bank on 1 January 2015 570 debit
23 The diagram shows a break-even chart.
depreciation of non-current assets 820

$
payments to suppliers 39 400
revaluation of premises 50 000
provision for doubtful receivables Y 8 000
receipts from customers 148 250

X
What is the budgeted cash balance at end of January 2015?

A $108 280 B $109 420 C $151 100 D $152 240

0 number of units

What is indicated by the line XY?

A total costs
B total fixed costs
C total sales
D total variable costs
 
 
24 (June15/12/Q23)  
The following figures are given for a factory’s overheads and machine hours worked.
 
  machine hours total overhead costs
overhead
  absorption rate

  budgeted 122 000 $268 400 $2.20

actual 116 000 $261 000 $2.25

What was the under or over absorption of overhead for the quarter?

A $5800 over absorbed

© UCLES 2015 9706/13/M/J/15
B $5800 under absorbed
 B $5800 under absorbed
C $7400 over absorbed
D $7400 under absorbed

Q42  
25 Which costing method is used to calculate a break-even point?

A absorption
B batch
C marginal
D unit
 
 
(June15/12/Q25)  
 
 
Q43.  
© UCLES 2015 9706/12/M/J/15
11

26 Which is not a characteristic of job costing?

A Each cost unit is separately identifiable.

B 11
Production involves repetitive operations.
26 Which is not a characteristic of job costing?
C Production is based on specific customer orders.
A Each cost unit is separately identifiable.
D Production is usually of short duration.
B Production involves repetitive operations.  
(June15/12/Q26)  
27   A business plans to replace its computer systems. Its existing hardware was bought seven years
C Production is based on specific customer orders.

Q44.  
Dago Production
and its is usually offive
software short duration.
years ago.
 
27 A What type
business of cost
plans is the
to replace its existing
computer system?
systems. Its existing hardware was bought seven years
ago and its software five years ago.
A fixed
What type of cost is the existing system?
B stepped
A fixed
sunk
BC stepped
CD sunk
variable
D variable
 
28   A business manufactures three products which all use the same material. The following
28  A information
business manufactures three products which all use the same material. The following
is available.
(June15/12/Q27)  
information is available.

  X YX Z Y Z
  $000 $000
$000 $000
$000 $000
 
selling price
  selling price 160 190
160 240
190 240
  direct material
direct material
56 68
56
90
68 90
  direct labour 35 32 50
  direct
variable labour
overhead 28 35
34 45 32 50
  variable overhead
contribution 41 28
56 55 34 45
 
 Direct material is in short supply.
contribution 41 56 55
 
In which order should the products be manufactured to maximise profits?
Direct material is in short supply.
A X→Y→Z
In which order should the products be manufactured to maximise profits?
B Y→X→Z
X Z→→YX→
CA Y → Z
D Z→Y→X
 What type of cost is the existing system?

A fixed
B stepped
C sunk

Q45.  
D variable
 
28 A business manufactures three products which all use the same material. The following
information is available.

X Y Z
$000 $000 $000

selling price 160 190 240

direct material 56 68 90
direct labour 35 32 50
variable overhead 28 34 45
contribution 41 56 55

Direct material is in short supply.

In which order should the products be manufactured to maximise profits?

A X→Y→Z

B Y→X→Z

C Y→Z→X

D Z→Y→X
 
 
(June15/12/Q28)  
 
 
Q46.  
 
12

29 A company
© UCLES 2015 is forecasting its profits at two levels of activity.
9706/12/M/J/15 [Turn over

sales units 5000 8000

$ $
total fixed and variable costs 20 000 26 000
profit 15 000 30 000
sales revenue 35 000 56 000

Fixed costs and selling prices are unchanged within the above activity range.

What is the forecast profit if sales were 7000 units?

A $21 000 B $25 000 C $26 000 D $26 250

 
 
30  Which statement about a cash budget is correct?
 
(June15/12/Q29)  
A It includes credit sales and discount allowed.
 B It includes credit sales but excludes discount allowed.
 C It includes receipts from debtors and discount allowed.
 
 D It includes receipts from debtors but excludes discount allowed.
 2 depreciation of factory machinery
3 insurance of machinery
4 machine operators’ wages
5 raw material costs

 
Which items make up factory overhead?

Q47.  
A 1 and 2 B 2 and 3 C 2 and 4 D 3 and 5
 
23 Which graph shows the fixed cost per unit produced in a manufacturing process?

A B

fixed cost fixed cost

per unit per unit

0 0
quantity produced quantity produced

C D

fixed cost fixed cost

per unit per unit

0 0
quantity produced quantity produced
 
 
(June15/11/Q23)  
 
Q48.  
© UCLES 2015 9706/11/M/J/15

9
 
24 Actual output for a business is higher than budgeted output.

Which costs will still be the same as budgeted?

1 fixed cost per unit

2 total fixed cost
3 total variable cost
4 variable cost per unit

A 1 and 2 B 2 and 3 C 2 and 4 D 3 and 4

 
 
25 (June15/11/Q24)  
A business has an activity level below budget and fixed overhead expenditure below budget.
 
  Do these result in an under absorption of fixed overhead?
 
  activity below expenditure below
  budget budget
  A no no
 
  B no yes
  C yes no
D yes yes

26 A trader decides to manufacture a product rather than buy it from a supplier.

 A no no
B no yes
C yes no
  D yes yes
 
Q49.  
26 A trader decides to manufacture a product rather than buy it from a supplier.

Which statement about the buying-in price is correct?

A It is more than fixed cost of producing the product

B It is more than semi-variable cost of making the product
C It is more than total cost of making the product
D It is more than variable cost of producing the product
 
(June15/11/Q26)  
27   A company has been asked to quote a price for a specific job. Estimated costs are as follows.
 
  $
  direct materials 2000
Q50.  
10

28 A business had the following results indirect labour

April and May. 3300

Overheads are charged at 50% of labour cost.

April May

units
Profit is 20% of the produced
total and sold
job cost. 1000 1200
total revenue $50 000 ?
What is the total of the quotation for the job?
total contribution $22 000 ?
A $5300 B $6360
total profit
$6950
C $8 000 $10 500
D $8340

The selling price per unit remained constant. 9706/11/M/J/15

© UCLES 2015 [Turn over
What was the change in the variable cost per unit?

A decrease $0.75
B decrease $1.59
C increase $0.75
D increase $1.59
 
 
29 (June15/11/Q28)  
A company has the following budget.
 
  $
  revenue 1 000 000
 
contribution 550 000
 
  fixed production costs 275 000
  fixed non-production costs 55 000
 
  What is its budgeted break-even revenue?
  A $220 000 B $275 000 C $500 000 D $600 000

30 Which item will not appear in a cash budget?

A bad debt written off

 What was the change in the variable cost per unit?

A decrease $0.75
B decrease $1.59
C increase $0.75

Q51.  
D increase $1.59
 
29 A company has the following budget.

revenue 1 000 000

contribution 550 000
fixed production costs 275 000
fixed non-production costs 55 000

What is its budgeted break-even revenue?

A $220 000 B $275 000 C $500 000 D $600 000

30 (June15/11/Q29)  
Which item will not appear in a cash budget?
 
Q52.  
A bad debt written off 10

loan interest
27 BA company manufactures one product. During the year it produced 1000 units. Total costs were
as follows.
C repayment of bank loan 10

utility expenses $
27 DA company manufactures one product. During the year it produced 1000 units. Total costs were
as follows. raw materials ?
production labour 18 000
$
factory supervisor 8 000
raw materials ?
depreciation of equipment 3 000
production labour 18 000
rent 7 000
factory supervisor 8 000
carriage inwards 1 000
depreciation of equipment 3 000
© UCLES 2015 9706/11/M/J/15
Variable cost per unit was $51.
rent 7 000
What was the total cost of raw materials?
carriage inwards 1 000

 
A $21 000
Variable $25
cost per unitBwas 000
$51. C $32 000 D $33 000

(Nov  14/13/Q27)  
28   A product has a variable cost of $50 and a selling
What was the total cost of raw materials?
price of $80. Fixed costs are $90 000.
Q53.  
ABudgeted
$21 000sales are 8000
B $25 units.
000 C $32 000 D $33 000
  What is the margin of safety?
28 AA product has a variable cost of $50 and a selling price of $80. Fixed costs are $90 000.
1800 units
Budgeted sales are 8000 units.
B 3000 units
What is the margin of safety?
C 5000 units
A 1800 units
D 6200 units
B 3000 units
5000 units
29 CA business has sales of $250 000, fixed costs of $50 000 and a contribution / sales ratio of 30%.

 
6200
DWhat units
is the profit?
  A $25 000 B $60 000 C $75 000 D $200 000
29   A business has sales of $250 000, fixed costs of $50 000 and a contribution / sales ratio of 30%.
(Nov  14/13/Q28)  
What is the profit?

A $25 000 B $60 000 C $75 000 D $200 000

28 A product has a variable cost of $50 and a selling price of $80. Fixed costs are $90 000.
Budgeted sales are 8000 units.

What is the margin of safety?

A 1800 units
B 3000 units
 
 
C 5000 units

Q54.  
D 6200 units
 
29 A business has sales of $250 000, fixed costs of $50 000 and a contribution / sales ratio of 30%.

What is the profit?

A $25 000 B $60 000 C $75 000 D $200 000

 
(Nov  14/13/Q29)  
 
Q55.   9

26 A business has fixed costs of $100 000. It sells a single

9 product for $25 per unit, and its
contribution to sales ratio is 40%.

A business
26 What has fixed
is the break-even point costs
in units?of $100 000.9 It sells a single product for $25 per unit, and its
contribution to sales ratio is 40%.
26 A business has fixed costs of $100 000. It sells a single product for $25 per unit,   and its
A 6667 B 10 000 C 40 000 D 250 000
  contribution
What is thetobreak-even point
sales ratio is in units?
40%.
27 (Nov  
What is 14/12/Q26)  
the purpose of cost accounting?
Q56.  
A 6667
What is the break-evenBpoint
A to aid decision-making
000
10in units? C 40 000 D 250 000
© UCLES 2014
A 6667 B 10 000
9706/13/O/N/14
C 40 000 D 250 000  
B to calculate the value of non-current assets
27 What is the purpose of cost accounting?  
C to give a true and fair view of a company’s financial situation
27 What
A to is aid
the decision-making
purpose of cost accounting?
D to value the contribution made by a firm’s workforce
AB totoaid decision-making
calculate the value of non-current assets
28 A business provides the following financial information.
BC totocalculate the and
give a true value of view
fair non-current assets financial situation
of a company’s
C to give a true and fair view of a company’s$financial
per unit situation
D to value the contribution made by a firm’s workforce
(Nov   14/12/Q27)  
selling price
D to value the contribution made by a firm’s workforce 41

28 Q57  
direct materials 5
A business provides the following financial information.
direct labour
28 A business provides the following 8
financial information.
variable overhead 3 $ per unit
fixed overhead 4
$ per unit
selling price 41
profitselling price 21 41
direct materials 5
What is the marginal cost per unit?direct materials 5
direct labour
directClabour
8
A $13 B $16 $20 D 8$25
variable
variable overhead
overhead 3 3
29 A business hires machinery at a cost of $700
fixed
fixed per machine per month.
overhead
overhead 4 4Each machine can produce
1000 units a month. A maximum of 10 machines can fit into the factory. The factory rent is $4900
per month. Other costs amount to $2 per unit.
profit
profit 21 21
What is the unit cost if 8500 units are produced in a month?
What
Whatisisthe
themarginal
marginalcost perper
cost unit?
unit?
A $3.19 B $3.23 C $3.28 D $3.32
 
AA $13
$13 B B $16
$16 C C$20$20 D $25 $25
D
(Nov  14/12/Q28)  
29 AAbusiness
29 businesshires
hiresmachinery
machineryat at
a cost of $700
a cost per per
of $700 machine
machineper month. EachEach
per month. machine can produce
machine can produce
1000 units a month. A maximum of 10 machines can fit into the factory. The factory
1000 units a month. A maximum of 10 machines can fit into the factory. The factory rentrent is $4900
is $4900
per month. Other costs amount to $2 per unit.
per month. Other costs amount to $2 per unit.
What is the unit cost if 8500 units are produced in a month?
What is the unit cost if 8500 units are produced in a month?
A $3.19 B $3.23 C $3.28 D $3.32
 revenues
and costs

Q58.   0 10
units
25 What does the line between points X and Y on the break-even chart represent?
A total costs
X
B total gross profit
C total profit for the year
Y
$
D total variable costs
revenues
and costs

26 Extracts from the costing records of a builder who has completed two houses are shown.

$
0 units
building inspection fees 2 000
A total costs
land (four plots) 100 000
B total gross profit
labour 160 000
C total profit for the year
materials used 40 000
D total variable costs
 
  What is the cost of completing one house?
(Nov   14/11/Q25)  
26 Extracts from the costing records of a builder who has completed two houses are shown.
A $125 000 B $126 000 C $127 000 D $151 000
  $
Q59.  
building inspection
27 Which item needs to be increased to makefees 2 000 point fall?
a break-even
land (four plots) 100 000
A budgeted sales
labour 160 000
B fixed costs
materials used 40 000
C marginal costs
What is the cost of completing one house?
D selling prices
A $125 000 B $126 000 C $127 000 D $151 000

 
27 (Nov  
Which1item
4/11/Q27)  
needs to be increased to make a break-even point fall?
Q60.  
11
A budgeted sales
28 A business provides the following information about a product.
B fixed costs
C marginal costs $

D selling prices variable cost per unit 16

© UCLES 2014 9706/11/O/N/14
selling price per unit 30
total fixed costs 35 000
budgeted profit 95 000

How many units should it produce to achieve the budgeted profit?

A 4286 B 4334 C 6786 D 9286

© UCLES 2014 9706/11/O/N/14
 
29 (Nov   14/11/Q28)  
The following information is available for a manufacturing company for June 2014.

budgeted overheads $108 000

actual overheads $112 000
budgeted labour hours 24 000
 D 2.26 times

25 The direct material cost of 20 000 units is $8000. 400 direct labour hours are required at a cost of
$6000. Overheads are absorbed at 150% of the cost of direct labour.

What is the cost per unit?

  5
Q61.  
A $0.40 B $0.70 C $0.85 D $1.15
12   For the eleven months ended 31 August 2013, snack bar takings were correctly recorded at
26 $109 340. Forinformation
The following September 2013, the snack bar takings were mixed up with other income. The
is available.
snack bar profit margin was 30%.
$
The table shows figures for the snack bar for September 2013.
break even sales revenue 15 000
$
unit sales price 10
opening
fixed costs inventory at cost 6303
6 000
purchases 8844
What is the variable cost per unit?
closing inventory at cost 7370
A $2.00 B $2.50 C $4.00 D $6.00
What was the gross profit of the snack bar for the year ended 30 September 2013?  
(June  14/13/Q26)  
  A $27 566 B $36 135 C $36 593 D $43 912
Q62.  2014
© UCLES 9706/13/M/J/14

13 A sole trader runs a retail store.

Which department is most likely to close?

A the one with a negative contribution

B the one with a negative profit
C the one with a positive contribution
D the one with a positive profit
 
 
14 (June   14/12/Q13)  
A business owner suspects a loss of cash has occurred. He provides the data shown.
 
  10 $
Q63.  
cashtotal
28 A business has the following balance at the
overheads forstart of the month
two different output levels. 150
cash balance at the end of the month 100
total overheads output
cash banked$ (units) 10 200
cash sales for the month 20 000
200 000 10 500
216 000 30 000
How much cash has been lost?
What is the total fixed overheads cost?
A $200 B $250 C $300 D $350
A $16 000 B $48 000 C $168 000 D $216 000
 
 
29 (June   14/12/Q28)  
The data relates to the production of three products.
 
  product X product Y product Z
  $ $ $

contribution per unit 160 175 190

fixed overhead per unit 125 130 160
labour hours per unit 1 1.25 0.75

The company is experiencing a shortage of labour.

 216 000 30 000
Which ratio should he use?
What is the total fixed overheads cost?
A gross profit percentage
A $16 000 B $48 000 C $168 000 D $216 000
B net profit percentage
Q64.  
C trade payables turnover
29 The data relates to the production of three products.
D trade receivables turnover
product X product Y product Z
$ $ $
23 The following information is available about two similar businesses.
contribution per unit 9 160 175 190
fixed overhead
27 The following information per
relates to unit
two 125
production departments130
X
160 business.
of a manufacturing
Y
labour hours
sales per unit 1 1.25
$30 000 $35 0.75
000
assembly polishing
gross profit
The company is experiencing percentage
a shortage of labour. 60% 62%
prime cost ($000) 880 1100

In which order should netoverheads

indirect
the profit percentage
products ($000)
be ranked to 996 30%profit?
maximise 1363 8%
machine hours (000) 100 150
Which business
1 is2 better at
3 controlling its costs?
labour hours (000) 75 220
A X cost ofYsales Z expenses
What are the overhead absorption rates?
B Y X Z
A X X
assembly polishing
C Z X Y
B $ X $ Y
D Z Y X
 
A
C 9.96 Y 6.20 X
(June  
DB 14/12/Q29)  
13.28
Y 9.09
Y
30   Sybil owns a vehicle which on 1 August 2014 will be shown at a cost of $10 000 with accumulated
C 18.76 11.20
  depreciation of $6000.
24 Q65.  
D 25.01 16.42
A
Onbusiness
that datehas
sheaexpects
non-current asset
to trade it inturnover
against aofnew
two vehicle
times, based on non-current
with a cost of $15 000, assets
receivingvalued
a at
  $250 000 at the end of 2011.
trade-in allowance of $3500. The company uses the reducing balance method to depreciate its
28 non-current
A manufacturerassets
has aattotal
25% per annum.
production cost of $50 000 to make 20 000 units. This increases to
$60 000 if production is increased to 25 000 units. for August 2014?
Which figure will appear in Sybil’s cash budget
In 2012 sales revenue increased by 20%. There were no purchases or disposals of non-current
What$5000
A B 35 000
is the total cost of $11 units?
000 C $11 500 D $15 000
assets during the year.
A $70 000 B $80 000 C $84 000 D $87 500
 
What is the non-current asset turnover for 2012?
(June  
29 A
14/11/Q28)  
A company provides theBfollowing information about its product.
2.13 times 2.40 times C 2.67 times D 3.20 times
 
Q66.   selling price $100
25 Which cost will fall as production is reduced?
variable cost per unit $40
A fixed costs per unit fixed costs $21 600
© UCLES 2014 break even point9706/12/M/J/14
360 units
B total fixed costs
If thetotal
C variable
business costs
changes its production method, contribution will increase by 10% and fixed costs
will increase by 5%.
D variable costs per unit
What would be the effect on the break even point?  
 
(Nov  13/13/Q25)  
A decrease by 16 units

  B 2013
© UCLES decrease by 36 units 9706/13/O/N/13 [Turn over
  C increase by 6 units
 
 
D increase by 18 units

© UCLES 2014 9706/11/M/J/14 [Turn over

28 A manufacturer has a total production cost of $50 000 to make 20 000 units. This increases to
$60 000 if production is increased to 25 000 units.

What is the total cost of 35 000 units?

Q67.  
A $70 000 B $80 000 C $84 000 D $87 500
 
29 A company provides the following information about its product.

selling price $100

variable cost per unit $40
fixed costs $21 600
break even point 360 units

If the business changes its production method, contribution will increase by 10% and fixed costs
will increase by 5%.

What would be the effect on the break even point?

A decrease by 16 units
B decrease by 36 units
C increase by 6 units
D increase by 18 units

 
(June  14/11/Q29)  
  2014
© UCLES 9706/11/M/J/14 [Turn over
Q68.  
8

26 A company makes and sells one product incurring the following costs.

12 kilos of material at $3 per kilo

4.5 labour hours at $12 per hour
production overheads $6 per unit
selling overheads $5 per unit

What is the total direct cost per unit?

A $36 B $42 C $90 D $101

 
(Nov  13/13/Q26)  
 
27 A company receives an order for 10 000 units.
  The following information is available.
 
 
 
units produced per machine hour 500
  labour costs per machine hour $25
 
 
raw material cost per unit $2
  overheads recovered per machine hour $40
 
  What is the cost of production?
 
  A $11 300 B $21 300 C $33 500 D $52 500

28 The costs of a company that annually sells 10 000 units are as follows.

$
 labour costs per machine hour $25
raw material cost per unit $2
overheads recovered per machine hour $40

What is the cost of production?

Q69.  
A $11 300 B $21 300 C $33 500 D $52 500
 
28 The costs of a company that annually sells 10 000 units are as follows.

direct material 50 000

assembly labour 100 000
factory overheads 70 000

The normal selling price of each unit is $50.

If it was reduced to $35, how many more units9need to be sold to break-even?

The1500
23 A tradeunits 2000 units
B turnover
receivables C 3500
for a company wasunits
100 days D 5000This
in 2011. unitsreduced to 90 days in
2012, with no change in the sales revenue.  
(Nov  13/13/Q28)  
Which statement explains this change?
Q70.   9
A Credit customers are paying earlier.
29 A company manufactures four products.
B Credit customers are paying later.
C Gamma
Credit suppliers are being paid earlier. Rho Theta Zeta

D contribution
Credit suppliers per
are unit
being($)paid later. 10 12 14 16
material required (litres) 5 4 6 7
24 A company provides the following information.
© UCLES 2013 is only enough material to make
If there 9706/13/O/N/13
three of the products, which product should be
discontinued? $
A Gamma trade payables at start of year 38 000
B Rho trade payables at end of year 49 000
C Theta payments to credit suppliers 210 000

 
D Zeta cost of sales 250 000
  What was the trade payables turnover?
30 (Nov  
Sales 1 3/13/Q29)  
for January 2014 are expected to be $10 000 and these are expected to increase by $2000
  A
each 72 days 10% ofBsales
month. 81 will
daysbe cash Csales.
86 days D 90are
Credit customers days
expected to pay after one
Q71.  
month.

A company
25 Which makes
amount three
will be products.
shown in the cash budget for receipts from customers in March 2014?

A $12 000 B $12 200 C $13 800

contribution D $14 000
contribution
per unit $ per hour $

product 1 14 2.1
product 2 13 2.6
product 3 8 2.4

Total available labour hours are insufficient to make enough of each product to meet demand.

In what order should the products be produced to maximise profit?

A 1, 2, 3 B 1, 3, 2 C 2, 3, 1 D 3, 2, 1

 
(Nov  13/12/Q25)  
  
Q72.  
 
10

26 The cost of using a mobile phone is made up of a monthly rental charge and the cost of individual
phone calls.

What type of cost is this? 10

The fixed
26 A cost of using a mobile phone is made up of a monthly rental charge and the cost of individual
phone calls.
B semi-variable
What
C type of cost is this?
stepped
10
A
D fixed
variable  
26   The cost of using a mobile phone is made up of a monthly rental charge and the cost of individual
B semi-variable
27 (Nov  
phone
A 1calls.
3/12/Q26)  
business sells its product for $10 per unit and has variable costs of $6 per unit. The table
  shows the fixed costs for the year.
C stepped

Q73  
What type of cost is this?
D variable
  A fixed $

A business
27 B factory
sells its product for
semi-variable $10 rent
per unit and 30 000variable costs of $6 per unit. The table
has
shows the fixed costs for the year.
other fixed costs 70 000
C stepped
What is the break-even point?
D variable $

A 10 000 units B factory rent

16 667 units 30 000D
C 17 500 units 25 000 units
27 A business sells its product forother
$10fixed
per costs
unit and has variable costs of $6 per unit. The table
70 000
shows the fixed costs for the year.
28 A company’s financial information is as follows.
What is the break-even point?
$
A 10 000 units B 16 667 units C 17 500 units $ D 25 000 units
 
sellingfactory rent 30 000
  price per unit 55
28   A company’s financial information
other
variable is asfixed
costs percosts
follows.
unit 70 000
15
(Nov   13/12/Q27)   total fixed costs
What is the break-even point? 33 000
  $

  A 10 000 units B 16selling 667 units 17 500 units 55

C unit
price per D 25 000 units
Q74.  
If the selling price is reduced to $40, how many extra units need to be sold to break-even?
variable costs per unit 15
495 B 825 1320 D 2200
28 A
A company’s financial information is asCfollows.
total fixed costs 33 000

29 A company is asked to make a new machine for a customer. It $provides the following estimates.
If the selling price is reduced to $40, how many extra units need to be sold to break-even?
selling price per unit
materials will cost $1100 55
A 495 B 825variable costsCper1320unithour D15 2200
labour will be 30 hours at a cost of $14 per
total fixed
The company charges overheads at $10costs
per labour hour and33has
000a mark up of 30% on total cost.
29 A company is asked to make a new machine for a customer. It provides the following estimates.
What is the price on the job cost sheet?
materials
If the selling willreduced
price is cost $1100
to $40, how many extra units need to be sold to break-even?
A $1520 B $1820 C $1976 D $2366
labour will be 30 hours at a cost of $14 per hour
 
A 495 B 825 C 1320 D 2200

  The company charges overheads at $10 per labour hour and has a mark up of 30% on total cost.
29   A company
What is asked
is the price to make
on the a new
job cost machine for a customer. It provides the following estimates.
sheet?
(Nov  
© UCLES 13/12/Q28)  
2013 9706/12/O/N/13
  A $1520materials will
B cost $1100
$1820 C $1976 D $2366
  labour will be 30 hours at a cost of $14 per hour
  The company charges overheads at $10 per labour hour and has a mark up of 30% on total cost.

What
© UCLES is
2013 the price on the job cost sheet? 9706/12/O/N/13

A $1520 B $1820 C $1976 D $2366

 A current ratio
23 Which of the following measures a business’ average credit period?
B inventory turnover
9
A current ratio
C liquid (acid test) ratio
23 BWhich of theturnover
inventory following measures a business’ average credit period?
D trade receivables turnover
Q75  
CA liquid (acid
current test) ratio
ratio
24 DWhich expense
trade would be
receivables classified as a variable cost of a furniture manufacturer?
turnover
B inventory turnover
A factory manager’s salary
C liquid (acid test) ratio
24 Which expense
B plant would be classified as a variable cost of a furniture manufacturer?
depreciation
D trade receivables turnover
royaltiesmanager’s salary
AC factory
vehicle
D plant insurance
depreciation
24 BWhich
 
expense would be classified as a variable cost of a furniture manufacturer?
(Nov   1 3/11/Q24)  
C royalties
factory manager’s salary
25 AAcompany
 D vehicle has the following
insurance
annual costs.

  B plant depreciation
$
Q76  
C royalties
25 A company has the following
purchases of annual costs.during the year
raw materials 53 000
D vehicle insurance
wages and salaries: production staff 110 000
$
administration staff 56 000
purchases
25 A company hasproduction of raw
the following materials
annual costs.during the year 53 000
overheads 16 000
wages and salaries:
administration production
expenses excluding staff
wages 110 000
42 000
$
selling and distribution administration
overheads staff 56 000
34 000
purchases
production of raw materials during the year
overheads 53 000
16 000
What is the total indirect cost for the year?
wages and salaries:
administration expensesproduction staff
excluding wages 110 000
42 000
A $132 000 B $148 000 C $163 000 D $258 000
administration staff
selling and distribution overheads 56 000
34 000

Whichisstatement
26 What production overheads
is correct? 16 000
the total indirect cost for the year?
A Fixed costs per administration
unit decrease asexpenses
productionexcluding
increases. wages 42 000
A $132 000 B $148 000 C $163 000 D $258 000
B Total fixed costsselling andasdistribution
decrease overheads
production increases. 34 000  
(Nov   13/11/Q25)  
C Total variable costs decrease as production increases.
 
26 WhichWhat statement
is the totalisindirect
correct? cost for the year?
 A Fixed costs per unit decrease as
D Variable costs per unit decrease as production increases.
A $132 000 B $148 000 production C $163increases.
000 $258 000
 
D
Q77  
B Total fixed costs decrease as production increases.
Totalstatement
26 CWhich variable costs decrease as production increases.
is correct?
DA Variable costsper
Fixed costs perunit
unit decrease
decrease as
as production
productionincreases.
increases.
B Total fixed costs decrease as production increases.
C Total variable costs decrease as production increases.
© UCLES 2013 9706/11/O/N/13 [Turn over
D Variable costs per unit decrease as production increases.
 
 
(Nov  13/11/Q26)  
 
  2013
© UCLES 9706/11/O/N/13 [Turn over
 
 
 

© UCLES 2013 9706/11/O/N/13 [Turn over

 1 It apportions
27 Which statements overheads
about absorption between
costing are production
correct? and service departments.
2 It enables a company to know its break-even level of production.
1 It apportions overheads between production and service departments.
3 It leads to higher inventory valuations than marginal costing.
2 It enables a company to know its break-even level of production.
34 ItIt leads
is used
to by management
higher for make or
inventory valuations buymarginal
than decisions.
costing.

Q78.   4 It is used by management for make or buy decisions.

A 1, 2 and 3 B 1 and 3 only C 2 and 4 only D 3 and 4 only

  A 1, 2 and 3 B 1 and 3 only C 2 and 4 only D 3 and 4 only

28 An accountant prepared the following break-even chart.

28 An accountant prepared the10

following break-even chart. sales revenue
budget
108 sales revenue
budget total costs
costs 86
and total costs
costs
revenues 6
and
($m) 4
revenues
($m) 42 fixed costs

2 fixed costs
0
0 1 2 3 4 5
0
0sales1volume
2 (millions
3 4of units)
5

The budgeted sales volume issales volume

4.5 million (millions of units)
units.
The budgeted
Which sales
profit can be volume is 4.5
anticipated at million units.
this level?
Which profit can be anticipated at this level?
A $2.5 million B $4.5 million C $7 million D $9 million
 
(Nov  
A $2.5 13/11/Q28)  
million B $4.5 million C $7 million D $9 million
29 Q79.  
Which statement best describes job costing?
29 Which statement
A a costing best describes
method job costing?
that calculates the cost of meeting a specific customer order
A
B aa costing
costingmethod
methodthat calculates
that the the
calculates costcost
of meeting a specific
of producing customeroforder
a number identical units for a
customer
B a costing method that calculates the cost of producing a number of identical units for a
C customer
a costing method that enables overheads to be absorbed into the cost of the product
C
D aa costing
costing method
methodthat
thatenables overheads
separates to be
fixed costs absorbed
from variableinto the cost of the product
costs

 
D a costing method that separates fixed costs from variable costs
30   Which item would appear in a cash budget?
30 (Nov  
Which1item
A bad3/11/Q29)  
would appear in a cash budget?
debts 10
Q80.  
A bad debts
cash discounts
26 AB business makes a single product. The following information is available.
B cash discounts
C depreciation
C depreciation total cost
D loan repayments production
$
D loan repayments
600 units 4200
© UCLES 2013 9706/11/O/N/13
800 units 5200
© UCLES 2013 9706/11/O/N/13

What is the fixed cost per unit?

for 600 units for 800 units

$ $

A 2.00 1.50
B 2.00 2.00
C 5.00 5.00
D 7.00 6.50
 
(June  13/13/Q26)  
27   A company produces two different products which use the same material.

One month there is a shortage of material and the company needs to reduce production of one
product.

Of which product should the company reduce production first?

A the one with the higher contribution per kilo of material

 for 600 units for 800 units
$ $

A 2.00 1.50
B 2.00 2.00
C 5.00 5.00
 
 
D 7.00 6.50

Q81.   8
27 AA company
24 company produces two different
has ordered products which
a new machine, to be use the same
delivered material.
in six months. In the short term, the
machine hours will be a limiting factor. It has made the following calculations.
One month there is a shortage of material and the company needs to reduce production of one
product.
product X product Y product Z
Of which product should the company reduce production first?
contribution per unit made $24 $12 $20
A the one with the higher contribution per kilo of material
machine hours used per unit 6 1 2
B the one with the higher contribution per unit
What will be the most profitable ranking order for production?
C the one with the lower contribution per kilo of material
AD X Y →with
→one
the Z the lower contribution per unit
 
(June   13/13/Q27)  
B X→Z→Y
28   C
A factory → Xforecast total production overhead of $400 000 and forecast
Y → Z has activity of 80 000
  D Z → Y → X
machine hours.

Q82.   8
In April actual overheads are $385 000 and actual activity is 70 000 hours.
24 A company has ordered a new machine, to be delivered in six months. In the short term, the
Whatfollowing
The is the level of under
data or over absorption in April? department of a manufacturing company.
25 machine hours will be is available
a limiting for Itthe
factor. hasproduction
made the following calculations.
Overheads are absorbed on a direct labour hour basis.
A $35 000 over
product X product Y product Z
B $35 000 under total
contribution per unit made direct
$24 $12 costs $20
overhead
C $40 000 over labour hours
machine hours used per unit 6 1$ 2
D $40 000 under
budgeted 96 000 242 880
What will be the most profitable ranking order for production?
actual 97 600 253 760
A X→Y→Z
What
B X→ is the
Z →over
Y or under absorption of overheads for the period?
A
C Y$6832
→Z→ over
X absorbed
© UCLES 2013 9706/13/M/J/13
B Z$6832 under
X absorbed
 
D →Y→
  C $10 880 over absorbed
25 (June  
The
D $1013/12/Q24)  
following data absorbed
880 under is available for the production department of a manufacturing company.
Q83.  
Overheads are absorbed on a direct labour hour basis.

26 The following information applies to a business. total

direct
overhead costs
labour hours
$
output sales profits
(units)
budgeted 96 000
$ $
242 880
actual 375 750 000
97 600 100760
253 000
500 1 000 000 250 000
What is the over or under absorption of overheads for the period?
What
A is theover
$6832 contribution
absorbedto sales ratio?
A
B 25% under absorbed
$6832 B 40% C 50% D 60%
C $10 880 over absorbed  
 
(June  13/12/Q26)  
D $10 880 under absorbed

 
26 The2013
© UCLES following information applies to a business.
9706/12/M/J/13

output sales profits

(units) $ $

375 750 000 100 000

  
Q84.   9

27 A business produces one product.

The following details are available for the budgeted production of 150 000 units.

9 $

27 A business produces one product.selling price per unit 1.20

The following details are available variable cost per production

for the budgeted unit 0.70
of 150 000 units.
fixed cost per
9 unit 0.20
$
What
27 A is theproduces
business break-even
one point in sales
product.
selling value?
price per unit 1.20
The
A following
$30 000 details are $60 variable
B available cost
000for the Cper unit
budgeted 0000.70 of 150
$72production D 000 units.
$180 000
fixed cost per unit 0.20  
28   A business provides the following information.
$

(June  
What is1the3/12/Q27)  
break-even point in selling
sales value?
price per unit 1.20
 A $30 000 B $60 000variable costCnumber of
$72unit
per 000 0.70overheads
D $180 000
Q85.   month
machine hours $
  fixed cost per unit 0.20
April information.
28 A business provides the following 34 000 493 000
What is the break-even point in sales value?
May 67 000 625 000
A $30 000 B $60 000 number
C $72of 000 overheads
D $180 000
month
machine hours $
The variable overhead rate per machine hour was $4.
April
28 A business provides the following 34 000
information. 493 000
What was the monthly fixed overhead cost?
May 67 000 625 000
A $132 000 $136 000
B month number of
C $268 000overheadsD $357 000
machine
The variable overhead rate per machine hourhours
was $4. $

April 34 000 493 000

29 What
Whichwas the monthly
business wouldfixed
useoverhead cost?
a job costing system of accounting?
May 67 000 625 000
AA $132 000
a chocolate B $136 000
factory C $268 000 D $357 000
 
  The variable overhead rate per machine hour was $4.
B a dairy milk farmer
29 (June   13/12/Q28)  
Which business would use a job costing system of accounting?
What
C awas the builder
monthly fixed overhead cost?
 A a chocolate factory
house
  A an oil000
D $132 refinery B $136 000 C $268 000 D $357 000
Q86.  
B a dairy milk farmer
a house
29 CWhich builder
business would use a job costing system of accounting?

DA an oil refineryfactory
a chocolate
B a dairy milk farmer
C a house builder
D an oil refinery
 
 
(June  13/12/Q29)  
 

© UCLES 2013 9706/12/M/J/13 [Turn over

 A Inventories have been written down to zero value in the period.
B Inventories have decreased during the period.
C Inventories have increased during the period.
D Inventories have stayed the same during the period.
 
Q87.  
28 A baker receives one order for 350 loaves of bread.

Which costing method will the baker use?

A absorption costing
B batch costing
C job costing
D unit costing
 
(June  13/11/Q28)  
Q88.   10

29 A company manufactures and sells chairs. The following financial information is available.

per unit $

selling price 25
direct material and labour 12
other variable production costs 3
variable selling costs 2
fixed costs 9 4

25 The company
Which item is ahas the option
variable of buying
production cost?in the chairs for resale instead of making them.

cleaner’s
A which
At wagesprice would the company’s profit be unchanged?
purchase
B depreciation of equipment
$15 B $17 $19 9706/11/M/J/13 $21
  [Turn over
A
© UCLES 2013
C D

(June  13/11/Q29)  
C factory business rates

30 Q89.  
D purchases
Purchases of raw materials
in January 2014 are expected to be $20 000 and to increase by $1000 each month.
 
20% of purchases are for cash. Credit purchases are paid for in the month following purchase.
The diagram
26 Which amountillustrates the costinbehaviour
will be shown of a typical
the cash budget telephone invoice.
for payments to credit suppliers in March 2014?

A $16 800 B $17 600 C $20 200 D $21 200

total
cost
($)

0
level of
activity

Which term best describes the behaviour of this cost?

A fixed
B semi-variable
C stepped

 
D variable

(Nov  12/13/Q26)  
27 ‘Contribution’ is an important feature of marginal costing.

How can the total contribution from a given activity be calculated?

A total direct costs minus total profit

B total fixed costs plus total profit
 Which transactions would always increase the ratio?
fixed
0
A
level of
activity
B 1 buying goods on credit
semi-variable
C stepped2 debtors paying their account to us
Which term best describes the behaviour of this cost?
3 converting an overdraft to a long-term bank loan
D variable
Q90   4 selling non-current assets for cash
A fixed
B semi-variable
27 ‘Contribution’
A 1 and 2 is an important
B 1 andfeature
3 of C
marginal
2 andcosting.
3 D 3 and 4
C stepped
How can the total contribution from a given activity be calculated?
D variable
23 A company wants to increase its return on capital employed in the short-term.
A total direct costs minus total profit
Which
27 B course
‘Contribution’
total ofcosts
fixedis action
an willtotal
important
plus achieve
profitthis?
feature of marginal costing.

AHowinvest
C total in new
can sales
the total plant and fixed
machinery
contribution
minus total from a given activity be calculated?
costs
BA reduce
D total the costs
total sales
direct level of
minus dividends
minus
total paid to investors
total profit
profit
CB reduce thecosts
total fixed level plus
of overhead expenses
total profit  
(Nov  
28 AD 1
Cbusiness2/13/Q27)  
revalue freehold
minusland
forecasts
total sales and
fixedbuildings
its margin
total upwards
of safety
costs for the next month as 20 % of budgeted sales. It expects
 to sell 10 000 units in the month. The selling price per unit is $5 and the marginal cost is $3.50.
Q91  
D total sales minus total profit

 
Beatrice
24 What calculates
is the forecastsome
fixedratios
cost?to help her understand her financial statements.
A business
28 A
What 000forecasts
helps
$12 its margin
her interpretation
B $12 of
500of
thesafety forCthe$15
ratios? next000 D% of
month as 20 budgeted
$18 000 sales. It expects
to sell 10 000 units in the month. The selling price per unit is $5 and the marginal cost is $3.50.
A availability of previous results
What is the forecast fixed cost?
B changes in the economic conditions
A $12 000 B $12 500 C $15 000 D $18 000
C her employment of an inexperienced book keeper  
(Nov  12/13/Q28)  
 
© UCLES the fact that Beatrice is a sole trader
D 2012 9706/13/O/N/12 [Turn over

Q92.  
25 A business employs machinists to make children’s sunhats.
© UCLES 2012 9706/13/O/N/12 [Turn over
As demand increases more machinists are employed. Every time eight extra machinists are
employed, one extra supervisor is needed.

How are total labour costs best described?

machinists supervisors

A fixed variable
B stepped variable
C variable fixed
D variable stepped

 
(Nov  12/12/Q25)  
 
  2012
© UCLES 9706/12/O/N/12

 
 
 
 
 
 
 
 
 
 
 
 9
Q93.  
26 The total cost of making product X is shown on the graph.

2500

2000

cost 1500 9
$
1000X is shown on the graph.
26 The total cost of making product

2500
500

2000 0
0 1000 2000 3000
cost 1500
number of units
$
1000
What is the variable cost per unit?
500
 
A $0.50 B $0.83 C $1.00 D $1.50
(Nov  12/12/Q26)   0
27   The diagram shows a break-even 0 chart. 1000 2000 3000
  number of units
$
 
 
What is the variable cost per unit? X sales revenue
  A $0.50 B $0.83 C $1.00 D $1.50
Q94.   total cost
revenue and
costs a break-even chart.
27 The diagram shows
Y
$
fixed cost
X sales revenue
O budgeted
level of activity total cost level of activity
revenue and
costs
What does line XY represent? Y
A the break-even point revenue fixed cost

B the margin of safety in terms of revenue

O budgeted level of activity
C the profit at break-even pointlevel of activity
D the
What total
does contribution
line at break-even point
XY represent?

A the break-even point revenue

B the margin of safety in terms of revenue
C the profit at break-even point
D the total contribution at break-even point
 
 
(Nov  12/12/Q27)  
 
  2012
© UCLES 9706/12/O/N/12 [Turn over
 
 

© UCLES 2012 9706/12/O/N/12 [Turn over

28 The budget for a product is shown.

unit sales 620 000

$
Q95   10
selling price per unit 31
28 The budget for a product is shown.
variable cost per unit 16

unitcontribution
sales per unit 620 000 15
$
fixedprice
selling costs
per unit 31$7 500 000
variable cost per unit 16
If the fixed costs rise to $7 800 000, the selling price is reduced to $29 per unit, and the variable
cost remains unchangedcontribution
at $16 per per unit
unit, 15 likely to reach 660 000 units.
the sales are

By what percentage will the break-even point increase?

fixed costs $7 500 000
A 4.0 % B 11.2 % C 16.7 % D 20.0 %
If the fixed costs rise to $7 800 000, the selling price is reduced to $29 per unit, and the variable
cost remains unchanged at $16 per unit, the sales are likely to reach 660 000 units.
29 When are the reported profits under marginal costing and absorption costing principles the same
By what percentage will the break-even point increase?
amount?

 
A 4.0 % B 11.2 % C 16.7 % D 20.0 %
A when sales revenue exceeds cost of sales
 
29 (Nov  
BWhen1are
2/12/Q28)  
when units
the produced
reported equals
profits under sales in units
marginal costing and absorption costing principles the same
  C when units produced exceeds sales in units
amount?

  A when sales revenue exceeds cost of sales

  B when units produced equals sales in units
D when unit sales exceeds production in units

Q96  
C when units produced exceeds sales in units
30 A business provides the following information.
D when unit sales exceeds production in units
number of overheads
month
30 A business provides the following information. hours
labour $

May number of
68 000 overheads
986 000
month
June labour 134
hours000 $ 1 316 000

May 68 000 986 000

The variable overhead rate per labour hour was $5.
June 134 000 1 316 000
What was the monthly fixed overhead cost?
The variable overhead rate per labour hour was $5.
A $330 000 B $340 000 C $646 000 D $670 000
What was the monthly fixed overhead cost?

A $330 000 B $340 000 C $646 000 D $670 000

 
(Nov  12/12/Q30)  
 
 
 
 
  2012
© UCLES 9706/12/O/N/12

 
© UCLES 2012 9706/12/O/N/12

 
 
 
 
 2 a decrease in selling and distribution expenses
3 an increase in rent received 9

4 an
24 A company’s increase
profit before in sellingcharges
finance prices has increased by 10 % in a year, whilst its gross profit
has only increased by 5 %.
A 1 and 2 B 1 and 4 C 2 and 3 D 3 and 4
Which factors could explain this?
Q97  
1 ashows
25 The diagram decrease in and
costs finance charges
revenues of a business.
2 represents
Which line a decrease in selling
total cost? and distribution expenses
3 an increase in rent received
A
4 an increase in selling prices

A 1 and 2 B 1 and 4 C 2 and 3 D 3 and 4 B

25 The diagram shows costs and revenues of a business.

costs and
revenues
Which line represents total cost?
$ C
AD

costs and 0 number of units

revenues
$ C  
26   A business pays a salesman a basic salary, plus commission based on how D
much he sells.
(Nov  12/11/Q25)  
  Which type of cost is the salesman’s total earnings?
  A fixed
  B semi-variable
  0
number of units
Q98  
C stepped
D variable
26 A business pays a salesman a basic salary, plus commission based on how much he sells.

Which type of cost is the salesman’s total earnings?

A fixed
B semi-variable
C stepped
© UCLES 2012 9706/11/O/N/12 [Turn over
D variable

 
(Nov  12/11/Q26)  
 
Q99  
10

27 A business
© UCLES 2012 has fixed costs for a month of 9706/11/O/N/12
$150 000. It sells its single product for $20 per[Turn
unit and
over
has a contribution/sales ratio of 0.75. It wishes to make a profit of $300 000 for the month.

How many units does the business need to sell?

A 10 000 B 20 000 C 22 500 D 30 000

 
 
28 (Nov   12/11/Q27)  
When valuing inventory of finished goods on an absorption cost basis, which costs should be
 
included?

 A production
B production and administration
C production, marketing and distribution
D production, marketing, administration and distribution
 Which aspect of financial statements helps Arun to decide where to invest?

A Financial statements deal with past performance.

B Historic cost is based on objective figures.
C Non-monetary values are excluded.

Q100.  
D Provisions can be based on estimates.
 
23 A company is going to sell a surplus non-current asset.

Which term describes the net book value of the non-current asset in respect of the decision to
sell?

A a fixed cost
B a stepped cost
C a sunk cost
D a variable cost
 
 
24 (June   12/13/Q23)  
What usually makes up the total cost of a manufactured product for inventory valuation
  purposes?

  A cost of production and selling and distribution overhead

  B direct materials and direct labour
 
Q101.  
C direct materials and manufacturing overhead
9
D prime cost and manufacturing overhead
25 The actual output for a business is lower than that forecast.

Which costs would normally still be the same as forecast?

1 fixed cost per unit

2 total fixed cost 9

25 The actual
3 output
totalfor a business
variable costis lower than that forecast.
Which costs
4 would normally
variable cost still
perbe the same as forecast?
unit
1 fixed cost per unit
1 and
A 2012 2 B 2 and 3 C 2 and 4 D 3 and 4
© UCLES
2 total fixed cost
9706/13/M/J/12
 
 
26 (June  
Ehsen 1 2/13/Q25)  
3 total variable cost
Nadeen manufactures one product, the miji. Each miji has a selling price of $10 and
 variable costs of $8cost
4 variable and perannual
unit fixed costs total $12 000. Ehsen wishes to make a profit of
 $14 000 a year.
A 1 and 2 B 2 and 3 C 2 and 4 D 3 and 4
Q102.  
How many mijis should Ehsen make each year?
26 Ehsen Nadeen manufactures one product, the miji. Each miji has a selling price of $10 and
2600costs of $8 and
Avariable 6000 fixed costsCtotal7000
B annual 13 000
$12 000. Ehsen Dwishes to make a profit of
$14 000 a year.

27 Which costing
How many mijismethod is most
should Ehsen suitable
make for fixing a selling price and which for deciding whether to
each year?
make or buy in a product?
A 2600 B 6000 C 7000 D 13 000
 
  decision to make or
27 (June  
Which 1 2/13/Q26)  
fixing
costing of selling
method pricesuitable for fixing a selling price and which for deciding whether to
is most buy in a product
  make or buy in a product?
  A absorption costing absorption costing
  B
decision to make or
fixing of sellingcosting
absorption price
buy marginal
in a productcosting
 
  A
C marginal costing
absorption costing absorption
absorption costing
costing

  DB absorption
marginal costing
costing marginal costing
marginal costing
C marginal costing absorption costing
D marginal costing marginal costing
28 A business provides the following data.

output
28 A business provides the following level
data. 1 2
direct labour hours 8 500 9 250
 buy in a product

A absorption costing absorption costing

B absorption costing marginal costing
C marginal costing absorption costing

  D marginal costing marginal costing

Q103.  
28 A business provides the following data.

output level 1 2
direct labour hours 8 500 9 250

total overheads $123 250 $124 563

The variable overhead cost is $1.75 per direct labour hour.

What is the fixed overheads cost when 8500 labour hours are used?

A $1313 B $14 875 C 9$108 375 D $123 250

22 The owner of a business has to decide whether to sell a particular type of product.  
 
(June  12/13/Q28)  
Which ratio is the most useful in making the decision?

  A current ratio 9
  B gross
22 The ownerprofit
of a ratio
business has to decide whether to sell a particular type of product.
  2012
© UCLES 9706/13/M/J/12 [Turn over
Q104.  
C return on capital employed
Which ratio is the most useful in making the decision?
  A
D trade receivables turnover
current ratio
 
23 B gross
Which profit ratio
statement best describes a sunk cost?
C
A areturn on capital
cost which employed
is irrelevant for the future
D
B atrade
cost receivables turnover
which must be matched against the revenue
C a cost which remains the same at all levels of production
23 Which statement
D a cost best describes
which varies a sunk
with the level cost?
of production
A a cost which is irrelevant for the future
 
24   A business has the following costs.
B a cost which must be matched against the revenue
(June  12/12/Q23)  
raw remains
materialsthe
$3 per unitat all levels of production
 
C a cost which same

  D a cost which varies with the level of production

direct labour $2 per unit

Q105.   stepped costs of $5000 for every 10 000 units

24 A business
What has of
is the cost theproducing
following15costs.
000 units?

A $75 000 B $82 500

raw materials $3 per unitC $85 000 D $105 000

direct labour $2 per unit

25 Which statement best describes fixed costs?
stepped costs of $5000 for every 10 000 units
A costs that are constant in total over a range of output.
What is the cost of producing 15 000 units?
B costs that are the same in total over any output level.
A
C $75 000
costs B $82
that are constant per 500 $85 000
C increases.
unit as output D $105 000

D costs that are the same as stepped costs.  

25 (June  
Which 1 2/12/Q24)  
statement best describes fixed costs?
 
 
Which
26 A costs
costs areare
that classified
constantas in
manufacturing
total over a overheads for a car assembly plant?
range of output.
  B costs1 that
assembly
are the line
sameemployees’ wages
in total over any output level.
  C costs2 that
cost
areofconstant
components
per assembled
unit as output increases.
 
D 3 that
costs depreciation of assembly
are the same line equipment
as stepped costs.
4 production managers’ salaries

26 Which costs
A 1 and 2 are classified
B 1 and as 4manufacturing
C 2 andoverheads
3 for
D a car assembly
3 and 4 plant?

1 assembly line employees’ wages

 direct labour $2 per unit
stepped costs of $5000 for every 10 000 units

What is the cost of producing 15 000 units?

A $75 000 B $82 500 C $85 000 D $105 000

Q106  
 
25 Which statement best describes fixed costs?

A costs that are constant in total over a range of output.

B costs that are the same in total over any output level.
C costs that are constant per unit as output increases.
D costs that are the same as stepped costs.
 
 
26 (June  
Which1costs
2/12/Q25)  
are classified as manufacturing overheads for a car assembly plant?
 
  1 assembly line employees’ wages
 
  2 cost of components assembled
Q107.   3 depreciation of assembly line 8equipment
  10
21 The balance
4 sheet of a business
production at 30salaries
managers’ June includes the following items:
27 A business has the following budget for April.
A 1 and 2 B 1 and 4 C Year 1 3
2 and Year 2D 3 and 4
$
trade receivables 47 000 63 000
sales revenue 1 000 000
other receivables 1 900 2 700
contribution 550 000
© UCLES 2012 9706/12/M/J/12 [Turn over
Total sales for Year 2 amounted
fixedto $450 000costs
production of which $85
275 000
000 were cash sales.
fixed selling
What is the average trade receivables costs period during
collection 55 000the year ended 30 June Year 2?

A 44is days
What the break-even 51 days
B sales revenue for C 55 days
April? D 63 days

A $450 000 B $500 000 C $600 000 D $670 000

 
22   The opening inventory of a business is $10 000 and the cost of goods sold is $200 000.

28   Which costing
Using the method
average is best
figure suited and
of opening to valuing
closinginventory and
inventory, which
what for ofdeciding
value closing whether
inventorytois
  accept
neededanto order below
give an normalturnover
inventory selling price?
of 10 times?
June  12/12/Q27)  
  A $10 000 B $20 000 C $30on
decision 000
acceptingDorder$40 000
valuation of inventory
Q108.   below normal selling price
23 What
A are major assumptions
absorption in contribution /absorption
costing sales (c / s)costing
analysis?

B 1 absorption
Costs can costing
be identified as eithermarginal costing
variable or fixed.
C 2 marginal
Fixed costcosting absorption
per unit is constant as costing
activity rises.
D 3 marginalcost
Variable costing marginal
per unit fluctuates with costing of activity.
the volume
4 Volume of activity is the only factor that affects revenue and variable costs.
29 The following information is forecast for May.
A 1 and 2 B 1 and 4 C 2 and 3 D 2 and 4
units  
 
24   Which statements about marginal costing
opening are correct? 25 200
inventory
(Nov  11/13/Q23)   closing
1 The marginal cost of a inventory
product includes an28allowance
200 for fixed overheads.
2 The marginal cost of a product represents $the additional cost of making one extra
unit.
marginal cost profit 100 800
3 If inventory decreases during a period,
absorption cost profit the profits
120 300 under absorption costing will be
lower than under marginal costing.
What is the overhead absorption rate?
 A $3500 decrease
B $4000 decrease
C $4000 increase

  D no effect
Q109.  
27 What does the diagram show about costs?

$000
sales revenue profit

revenue
and
costs

fixed costs

1 2 3 4 5
years

A Fixed costs are increasing.

B Total costs as a percentage of sales are decreasing.
C Variable costs per unit are decreasing.
D Variable costs per unit are increasing.
 
 
(Nov  11/13/Q27)  
© UCLES 2011 9706/13/O/N/11 [Turn over
 
Q110   10

28 A DVD has a selling price of $10.

cost per DVD $

direct materials 1.20

direct labour 0.80
factory overhead (fixed) 1.50
royalty payment 1.00
administration overhead (fixed) 0.60

What is the contribution per DVD?

A $4.90 B $5.90 C $7.00 D $8.00

 
 
 
29 A business has the following budgeted and actual results for a period.

(Nov  11/13/Q28)   $
 
  budgeted fixed overheads 354 000
  actual fixed overheads 360 000
 
 
under absorption of overheads 3 000

The fixed overheads are absorbed per unit.

The budgeted number of units was 118 000.

What is the actual level of activity in units?

A 118 000 B 119 000 C 120 000 D 121 000

  
Q111.  
10

25 Which line represents total variable cost?

A
10
10
25 Which line represents total variable cost?
25 Which line represents total variable cost?
A
B
A
$

C
B
D
$ B

$ C

O D
output C

D
 
(Nov   1 1/12/Q25)  
26 A company makes and sells one product that has a variable cost of $21 and a contribution to
  sales ratio of 30 %. Total fixed
O costs per month
outputare $112 500.
Q112.  
(Nov   11/12/Q26)  
How many units need to be sold each month to break-even?
O
26 A company makes and sells one product that has output
a variable cost of $21 and a contribution to
A 3750
sales units
ratio of 30 %. Total fixed costs per month are $112 500.
B 5357 units
26 How many units
A company need and
makes to besells
sold each month tothat
one product break-even?
has a variable cost of $21 and a contribution to
C 12
sales 500
ratio units
of 30 %. Total fixed costs per month are $112 500.
A 3750 units
D 16 071 units
How5357
B many units need to be sold each month to break-even?
units

A 12
C 500units
3750 units
27 A product has a contribution per unit of $20.
B 16  
D 071units
5357 units
  Which action would increase the total contribution by the greatest amount?
C 12 500 units
27  AAproduct has
a 10 % a contribution
increase per price
in selling unit of $20.
Q113.  
D 16 071 units
 
Which
B a action would increase
10 % increase the totalof
in the volume contribution
sales by the greatest amount?

AC aa10
10%%increase
reduction
in in variable
selling pricecosts
27 A product has a contribution per unit of $20.
20%%increase
BD aa10 in in
reduction thefixed
volume of sales
costs
Which action would increase the total contribution by the greatest amount?
C a 10 % reduction in variable costs
A
D
a 10 % increase in selling price
a 20 % reduction in fixed costs
B a 10 % increase in the volume of sales
C a 10 % reduction in variable costs
D a 20 % reduction in fixed costs

 
(Nov  11/12/Q27)  
 
 
© UCLES 2011 9706/12/O/N/11

© UCLES 2011 9706/12/O/N/11

  
Q114.  
  2
9
1 Which cost will decrease as production is increased?
24 A business sells goods at a mark up of 33.3 %.
A fixed costs per unit
Information for a year is given.
B total fixed costs
$
C total variable costs
revenue 600 000

 
D variable cost per unit
opening inventory 53 000
10
  closing inventory 68 000
(June   1 1/13/Q1)  
28 A business provides the following information for a month.
2 A business paid $10 000 for waste disposal in the year.
  What are the total purchases for the year?
Q115.  
actual direct labour hours worked 8000
AThe opening
$415 000 prepayment
B $435 000 was $1500
C $450and000
the closing accrual
D $465 000 was $2000.
  actual overhead expenditure $88 000

What was the charge budgeted direct labour

for waste hoursfor the year?
disposal 7500
25 A business has sales of $250 000, fixed costs of $50 000 and a contribution / sales ratio of 30 %.
budgeted overhead expenditure $90 000
A is$6500
What the profit? B $9500 C $10 500 D $13 500
What is the amount of the overhead over / under recovery?
A $25 000 B $60 000 C $75 000 D $200 000
A $2000 over-recovered  
3   The non-current assets of a business are shown.
26 (June   11/13/Q25)  
$2000 under-recovered
B business
A sells its product for $50 a unit and has variable costs of $30 per unit. Its fixed costs for
 
this year
C $8000 were $200 000. Next year, fixed costs are expected to be $260 000.
over-recovered end of year start of year
  How many more
D $8000 $ profit as this year?
units will have to be sold next year to make the same
under-recovered $
Q116.  
A 3000 B 5200 C 10 000 D 13 000
cost 360 000 300 000
29 Which graph shows the fixed cost per unit produced in a manufacturing process?
accumulated depreciation 120 000 75 000
27 The following informationA is provided by a company for a month. B
net book value 240 000 225 000
actual direct labour hours worked 4500
fixed cost the year, non-current
During assets
budgeted direct fixed cost
labourcosting
hours $110 5000
000 were bought and non-current assets with a
per unit
net book value of $20 000 were sold. per unit
budgeted overhead expenditure $80 000
overheads under-recovered
What was the depreciation charge for the year? $12 000
0 amount of the actual overhead expenditure? 0
What
A is$35
the 000 quantity
B $45 produced
000 C $50 000 quantity
D $75 produced
000
A $60 000 B $68 000 C $72 000 D $84 000
C D
4 Which transaction would increase the current assets of a business?

A paying invoices $950, after receiving $50 cash discount

fixed cost fixed cost
Bper unit
purchasing a machine on credit for per unit
$1200
C purchasing inventory for $1100 cash and selling it on credit for $1500
0 0 at below cost price
D selling quantity
inventory with anproduced
original cost of $800 quantity produced
 
 
 
(June  11/13/Q29)  
© UCLES 2011 9706/13/M/J/11 [Turn over

© UCLES 2011 9706/13/M/J/11

25 A business has sales of $250 000, fixed costs of $50 000 and a contribution / sales ratio of 30 %.

What is the profit?

A $25 000 B $60 000 C $75 000 D $200 000

Q117.  
26 A business sells its product for $50 a unit and has variable costs of $30 per unit. Its fixed costs for
this year were $200 000. Next year, fixed costs are expected to be $260 000.

How many more units will have to be sold next year to make the same profit as this year?

A 3000 B 5200 C 10 000 D 13 000

 
 
27 (June   11/13/Q26)  
The following information is provided by a company for a month.
 
  actual direct labour hours worked 4500
  budgeted direct labour hours 5000
Q118.   11
budgeted overhead expenditure $80 000
30 What do the break-even charts show regarding the profitability of and risk attaching to products 1
overheads under-recovered $12 000
and 2?

product
What is the amount of the1actual overhead expenditure? product 2
revenue C revenue
A$1m$60 000 B $68 000 $1m
$72 000 D $84 000

total cost
total cost

0 0
1000 1000
units units
© UCLES 2011 9706/13/M/J/11 [Turn over
profitability risk

A 1 is greater 1 is greater
B 1 is greater 1 is less
C 2 is greater 2 is greater
D 2 is greater 2 is less

 
 
(June  11/13/Q30)  
 
 
 
 
 
 
 
 
 
 
 A cost of sales work in progress
B stores control 10 goods
finished
stores
24 InCa job costing control
system, work
what is the correct in progress
entry to record the return of unused direct materials
from production to stores?
D work in progress stores control
119.  
 
debit credit

25 A company
A cost of sales two products.
manufactures work in progress
B stores control finished goods
product X product Y
C stores control work in progress
$ $
D work in progress stores control
selling price 20 30
direct labour (per unit) 10 20
25 A company manufactures two products.
direct materials (per unit) 4 2
product X product Y
Total fixed costs are $48 000. $ $

selling price 20 30
Only 3000 units of Y can be made and sold.
direct labour (per unit) 10 20
How many units of product X must be made and sold to break even?
direct materials (per unit) 4 2
A 1800 B 3000 C 4000 D 8000
Total fixed costs are $48 000.
 
  Only 3000 units of Y can be made and sold.
(Nov  10/13/Q25)  
26 A factory produces a product with a variable cost of $0.60 per unit.

  Fixed costs are $15 000 per quarter, including rent of $6000 per quarter.
How many units of product X must be made and sold to break even?

Q120.  
A 1800 B 3000 C 4000 D 8000
  If more than 20 000 units are made per quarter, additional space is required which increases the
rent by 50 %.
26 A factory produces a product with a variable cost of $0.60 per unit.
What is the total cost per unit of producing 30 000 units in a quarter?
Fixed costs are $15 000 per quarter, including rent of $6000 per quarter.
A $0.60 B $0.90 C $1.10 D $1.20
If more than 20 000 units are made per quarter, additional space is required which increases the
rent by 50 %.

What is the total cost per unit of producing 30 000 units in a quarter?

A $0.60 B $0.90 C $1.10 D $1.20

 
 
(Nov  10/13/Q26)  
 
 
 
 
  2010
© UCLES 9706/13/O/N/10
 
 
  2010
© UCLES 9706/13/O/N/10

 
 
 
 
 
 
 
  
 
Q121.  
12

29 The diagram shows a break-even chart.

0
number of units

What is indicated by the line XY?

A total costs
B total fixed costs
C total sales 8
D total variable costs
23 A soup manufacturer uses batch costing. It produces a batch of 10 000 tins of soup   with a direct
  materials cost of $2500.
30 (Nov  
On 1 1 0/13/Q29)  
January 2009 a business had prepaid rent of $50. During 2009, three rent payments were
 made
Directoflabour
$250 each. On 200
involved 31 December
hours at a2009,
cost the business
of $2000, stilloverheads
and owes $200are
rent on account
absorbed for rate of
at the
  2009.
$15 per direct labour hour.
 
The business owner
of has
a tincharged the rent payments made during 2009 in his income (profit and
 loss)
What is the cost
account.
of soup?
  A $0.25 B $0.45 C $0.55 D $0.75
Q122.  
What is the effect on net profit?
 
A $200 too high
24 The table shows costs at three activity levels.
B $200 too low
C $250 too high activity levels 65 units 90 units 100 units

D $250 too low $ $ $

fixed cost ? ? ?
variable cost ? ? ?
total cost 15 600 19 600 21 200

What is the fixed cost?

A $1600 B $4000 C $5200 D $5600

 
(June  10/13/Q24)  
25   A customer
Permission places
to reproduce items an order
where third-party formaterial
owned 20 000 bricks.
protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.
Which costing method will the supplier use to price the order?
University of Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of
Cambridge Local Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.

© UCLES batch
A 2010 9706/13/O/N/10

B job
24 The table shows costs at variable cost
three activity levels. ? ? ?
total cost 15 600 19 600 21 200
activity levels 65 units 90 units 100 units

What is the fixed cost? $ $ $

fixed cost ? ? ?
A $1600 B $4000 C $5200 D $5600
  variable cost ? ? ?
Q123.   total cost 15 600 19 600 21 200
25 A customer places an order for 20 000 bricks.
What is the fixed cost?
Which costing method will the supplier use to price the order?
A $1600 B $4000 C $5200 D $5600
A batch
25 A customer places an order for 20 000 bricks.
B job
Which costing method will the supplier use to price the order?
C marginal
A batch
 
D unit
(June  10/13/Q25)  
B job

  C marginal
26 A company has total production costs of $6000 to make 10 000 units, and $13 000 to make
Q124.  
D unit units.
24 000
 
What
26 A is its has
company totaltotal
costproduction
to make costs
20 000 units?to make 10 000 units, and $13 000 to make
of $6000
24 000 units.
A $1000 B $10 000 C $11 000 D $12 000
What is its total cost to make 20 000 units?

A $1000 B $10 000 C $11 000 D $12 000

 
(June  10/13/Q26)  
 
 
Q125.  
9

27 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 2010
©©UCLES wedding dresses a day are produced, what is9706/13/M/J/10
the daily labour cost?
UCLES 2010 9706/13/M/J/10

A $2850 B $3210 C $3230 D $3250

 
 
The graphs show projected sales and cost information for products X and Y.
(June  10/13/Q27)  
28

  product X product Y
$ $ 9
Q126.   sales
50 50
24 Which cost will fall as production is reduced? sales
40 total 40
cost total
A fixed costs per unit cost
30 30
B20 total fixed costs fixed
cost 20
C10 total variable costs 10 fixed
cost
D 0 variable costs per unit 0
0 10 20 30 40 0 10 20 30 40
 
quantity quantity
 
(Nov09/12/Q24)  
25 A particular cost is classified as ‘semi-variable’.
Which statement most accurately interprets the graphs?
  What effect will a 20 % reduction in activity have on the unit cost?
A Product X breaks even at a higher number of units sold than product Y.
B A Product X has lower
decrease by 20fixed
% costs than product Y.
C
B Product X has a lower selling price per unit than product Y.
decrease by less than 20 %
D Product X has a lower variable cost per unit than product Y.
C increase by 20 %
27 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?

A $2850 B $3210 C $3230 D $3250

Q127  
28 The graphs show projected sales and cost information for products X and Y.

product X product Y
$ $
sales
50 50
sales
40 total 40
cost total
cost
30 30
fixed
20 cost 20

10 10 fixed
9 cost
0 0
0 will10
24 Which cost 20 30 is reduced?
fall as production 40 0 10 20 30 40
quantity quantity
A fixed costs per unit
Which
B statement
total most accurately interprets the graphs?
fixed costs
9
C
A total variable
Product costseven at a higher number of units sold than product Y.
X breaks
Which
24 D costXwill
B variable
Product costs
fall
hasper
as production is reduced?
unitfixed costs than product Y.
lower
fixed costs
A Product
C X has per unitselling price per unit than product Y.
a lower
25 A particular cost is classified as ‘semi-variable’.
B Product
D X hascosts
total fixed a lower variable cost per unit than product Y.
What effect will a 20 % reduction in activity have on the unit cost?  
(June  
C total10/13/Q28)  
A business
variable costs
29 decreasepurchases
by 20 % a vehicle for $10 000. The business depreciates its non current (fixed)
 assets
A
at 20 % using
D variable coststheperdiminishing
unit value method.
 B decrease by less than 20 %
Q128.  
What is the depreciation charge for year 2?
C increase by 20 %
25 AA particular
$1600 cost is
B classified
$2000 as ‘semi-variable’.
C $6400 D $8000
D increase by less than 20 %
What effect will a 20 % reduction in activity have on the unit cost?
26 A business uses job costing to calculate the cost of vehicle repair jobs.
A decrease by 20 %
Overheads are allocated on an absorption costing basis.
B decrease by less than 20 %
What is the effect of this method of allocation?
C increase by 20 %
A overheads will include both fixed and variable overhead costs
D increase by less than 20 %
B overheads will include direct costs only  
 C overheads will include fixed overhead costs only
26 (Nov09/12/Q25)  
A business uses job costing to calculate the cost of vehicle repair jobs.
 D overheads will include variable overhead costs only
Q129.  
© UCLES 2010
Overheads 9706/13/M/J/10
are allocated on an absorption costing basis. [Turn over
27 A company has a product which sells for $1 per unit. The variable costs are $0.60 per unit, and
production of 200
What is the 000 of
effect units
thisis method
planned. of allocation?

Fixed costs are $0.20

A overheads willper unit at both
include the budgeted production
fixed and variablelevel.
overhead costs
What is the break-even
B overheads level? direct costs only
will include
A 40 000 units B 66 667 units C 100 000 units D 160 000 units
 
C overheads will include fixed overhead costs only
  D overheads will include variable overhead costs only
28
(Nov09/12/Q27)  
How is total contribution calculated?

A actual sales revenue less break-even sales revenue

27 BA company has a product which sells for $1 per unit. The variable costs are $0.60 per unit, and
sales revenue less fixed costs
production of 200 000 units is planned.
C sales revenue less total costs
DFixed costs
sales are less
revenue $0.20 per unit
variable costsat the budgeted production level.
 Fixed costs are $0.20 per unit at the budgeted production level.

What is the break-even level?

A 40 000 units B 66 667 units C 100 000 units D 160 000 units

Q130.  
28 How is total contribution calculated?

A actual sales revenue less break-even sales revenue

B sales revenue less fixed costs
C sales revenue less total costs 9

D sales
26 Which revenue
name is givenless variable
to the costsbetween a company’s actual sales and break-even sales?
difference

A margin of safety  
(Nov09/12/Q28)  
  B marginal cost 9
Q131.  
© UCLES
26 Which C 2009
marginal C-V-P
name is given to (cost-volume-profit)
9706/12/O/N/09
the difference between9analysis
a company’s actual sales and break-even sales?
[Turn over
 
marginal revenue
D margin
Which nameofissafety
26 A given to the difference between a company’s actual sales and break-even sales?
B marginal cost
A margin of safety
What
27 C best describes
marginal cost of direct materials
C-V-P (cost-volume-profit) analysis plus direct labour costs?
B marginal cost
D
A marginal revenue
absorption cost
C marginal C-V-P (cost-volume-profit) analysis
B marginalrevenue
D marginal cost
27 What best describes cost of direct materials plus direct labour costs?
C prime cost  
27 (June  
A
What best09/1/Q26)  
absorption cost cost of direct materials plus direct labour costs?
describes
  B
D total cost
marginal cost
Q132.  
A absorption cost
C prime cost
B marginal cost
28 A company has the information shown below.
D total cost
C prime cost
D total cost $
28 A company has the information shown below.
actual sales for August 320 000
28 A company has the information shown below. $
break-even sales for August 400 000
actual sales for August 320$000
total fixed costs for August 150 000
break-even sales for August 400 000
actual sales for August 320 000
total fixed
What is the margin of safety for costs for August
August? 150 000
break-even sales for August 400 000
A $80
What 000
is the negative
margin total
of safety forfixed costs for August
August? 150 000

A
B $80
What$80 000
000
is the negative
positive
margin of safety for August?
B
C $80
$170 000000
positive
negative
A $80 000 negative
C $170 000 negative
B $80
D $250 000 positive
000 positive  
(June  
D $250 0 9/1/Q28)  
000 positive
C $170 000 negative
Q133.  
$250 000 positive
D business
29 A has fixed costs of $100 000. It sells a single product for $25 per unit, and its
29 A business has fixed costs of $100 000. It sells a single product for $25 per unit, and its
contribution to sales ratio is 40 %.
contribution to sales ratio is 40 %.
29 A business has fixed costs of $100 000. It sells a single product for $25 per unit, and its
What
What isisthe
contributionthebreak-even
tobreak-even ispoint
point
sales ratio in%.
40 in units?
units?

A
A
What6667
6667 B B
is the break-even 10
10 000
point 000
in units? C 40C00040 000 D D 250 000
250 000
 
(June   09/1/Q29)  
A 6667 B 10 000 C 40 000 D 250 000
 
 B a loss of trade discounts on purchases but an increase in cash discounts taken from
suppliers
C an advertising campaign to promote higher sales leading to higher selling prices
D an increase in both production and selling costs
Q134.  
25 The data in the table relates to a small business.

sales 6000
variable costs 4500
fixed costs 900
net profit 600

What is the contribution to sales ratio?

A 10 % B 25 % C 33.33 % D 75 %
 
 
(Nov  08/1/Q25)  
 
Q135.  
© UCLES 2008
9
9706/01/O/N/08

26 The graph shows a break-even chart.

sales revenue
50
total costs
40

30
$000
20

10

0
0 1000 2000 3000 4000
units of sales

What are the fixed costs?

A $0 B $10 000 C $20 000 D $30 000

 
 
27 (Nov   08/1/Q26)  
What is a benefit of using absorption costing?
  A It allows a business to calculate the break-even point for production.
 
  B It allows a business to calculate the total cost of goods produced.
  C It allows a business to calculate the profit to be made on a product.
 
 
D It allows decision-making on utilising spare capacity by increasing production.

 
28   A business provides the following data for the year.
 
  budgeted output (units) 10 000
  actual output (units) 8 000
 
$
budgeted fixed production costs 1 200 000
budgeted variable production costs 800 000
budgeted fixed selling overhead 600 000
 Q136.  
  9
 
25 The diagram shows a break-even chart.

costs and
revenues
$
9
W X
Y
25 The diagram shows a break-even chart.

costs and
revenues
$
W X
Y

Z
0
number of units

Which line represents the margin of safety?

A WX B WY C XY Z D XZ
0
 
(June08/1/Q25)   number of units
26  Which
Assuming all other the
factors remain unchanged, the break-even point of a business can be lowered
  by increasing its
line represents margin of safety?

Q137.  
A WX B WY C XY D XZ
  A budgeted sales
B fixedallcosts
26 Assuming other factors remain unchanged, the break-even point of a business can be lowered
by increasing its
C marginal costs
A budgeted sales
D selling prices
B fixed costs
C marginal costs
27 A company uses a predetermined direct labour rate of $5.40 per hour to absorb production
 
D selling prices
overhead. Each unit of product manufactured requires four direct labour hours.
(June08/1/Q26)  
27  AThe following
company usesinformation is available
a predetermined for a period.
direct labour rate of $5.40 per hour to absorb production
 
overhead. Each unit of product manufactured requires four direct labour hours.

 The following informationactual production

is available overhead
for a period. $518 400
  under-absorbed production overhead $32 400
  actual production overhead $518 400
  What was the actual output of the
under-absorbed productoverhead
production in the period?$32 400
 
 What
A 22 was500 units output
the actual B of24 the000 unitsin theCperiod?
product 25 500 units D 30 000 units
 A 22 500 units B 24 000 units C 25 500 units D 30 000 units
 
 
 
 

© UCLES
© UCLES2008
2008 9706/01/M/J/08
9706/01/M/J/08 [Turn over [Turn over
 Q138  
  10

28 The information relates to the production of 50 000 units of a product.

10
per unit $
28 The information relates to the production of 50 000 units of a product.
selling price 25
per unit $
variable costs 15
selling price 25
contribution 10
variable costs 15
The fixed costs are $300 000. The margin of safety is 20 000 units.
contribution 10
The unit selling price is increased by 10 %.
The fixed costs are $300 000. The margin of safety is 20 000 units.
What is the percentage increase in the margin of safety?
The unit selling price is increased by 10 %.

 
A 13.6 % B 20 % C 24.2 % D 30 %
What is the percentage increase in the margin of safety?
(June08/1/Q28)  
29  AAcompany
13.6 % manufactures
B 20 % sells a single
and 24.2 %
C product. D 30 %

Q139  
At an output of 1000 units per month the budget shows
29 A company manufactures and sells a single product.

At an output of 1000 units per month the budget shows$

selling price 120 000

$
variable cost 40 000
selling price 120 000
fixed cost 50 000
variable cost 40 000
profit 30 000
fixed cost 50 000

Fixed costs are due to increase byprofit 30 000and the selling price will be increased to
$10 000 per month
maintain the profit at $30 000.
Fixed costs are due to increase by $10 000 per month and the selling price will be increased to
What is the
maintain theeffect
profiton
at the
$30break-even
000. point to the nearest unit?

decrease
AWhat by 42
is the effect onunits
the break-even point to the nearest unit?
BA increase by 42 units
decrease by 42 units
CB decrease by 42
increase by 125units
units
DC no changeby 125 units
decrease
D no change

 
 
(June08/1/Q29)  
 
 
 
 
 
 
  2008
© UCLES 9706/01/M/J/08

  2008
© UCLES 9706/01/M/J/08
 
 Q140  
11

30 A company sells two products, X and Y.

X Y

sales (units) 1000 2000

$ $
selling price per unit 22 12
contribution per unit 12 4

Which would increase the company’s profit by $10 000?

A a 30 % increase in the sales of X

B a 50 % increase in the sales of both products
C an increase in the selling price of X by $1 and Y by $6
D a reduction in the variable costs of both products by $5
 
 
(June08/1/30)  
 
 
Q141   9

24 A company has sales of $192 000, fixed costs of $40 000 and a contribution / sales ratio of one-
third.
9
What are its profits?
24 A company has sales of $192 000, fixed costs of $40 000 and a contribution / sales ratio of one-
third.
A $24 000 B $50 667 C $64 000 D $88 000
 
 What are its profits?
25 (Nov  
A firm0sells
7/1/Q24)  
its product for $10 per unit and has variable costs of $6 per unit. Its fixed costs for the
 
Ayear$24 are:000 B $50 667 C $64 000 D $88 000

Q142   $
25 A firm sells its product for $10 per unit and has variable costs of $6 per unit. Its fixed costs for the
year are: factory rent 30 000
other fixed costs 70 000
$
What is the break-even point?factory rent 30 000
A 10 000 units other fixed costs 70 000
B 16 667 units
What is the break-even point?
C 17 500 units
A 10 000 units
D 25 000 units
B 16 667 units
C 17 500 units
26 What does the line XY show?

 
D 25 000 units
 
26 (Nov   07/1/Q25)  
the line XY show? X
© UCLES 2008 9706/01/M/J/08
What does
 
  cost per unit
$ Y
X

cost per unit

$ Y
0 number of units produced
 What is the break-even point?

A 10 000 units
B 16 667 units
C 17 500 units
  D 25 000 units
Q143  
26 What does the line XY show?

cost per unit

$ Y

0 number of units produced

A Fixed costs per unit become less as production increases.

B Total fixed costs become less as production increases.
C Total variable costs become less as production increases.
D Variable costs per unit become less as production increases.

 
 
(Nov  07/1/Q26)  
  10
Q144  
27 A business provides the following information:
© UCLES 2007 9706/01/O/N/07 [Turn over
$

total fixed costs 10 000

unit selling price 1
variable unit production costs 0.75

What is the total sales revenue needed to break even?

A $2500 B $7500 C $10 000 D $40 000

 
 
28 (Nov   07/1/Q27)  
The total cost of making product X is shown on the graph.
 
  2500
 
  2000
 
  cost 1500
  $
1000
 
 
500
 
  0
  0 1000 2000 3000
number of units

What is the variable cost per unit?

A $0.50 B $0.83 C $1.00 D $1.50

 unit selling price 1
variable unit production costs 0.75

What is the total sales revenue needed to break even?

A $2500 B $7500 C $10 000 D $40 000

Q145  
28 The total cost of making product X is shown on the graph.

2500

2000

cost 1500
$
1000

500

0
0 1000 2000 3000
number of units

What is the variable cost per unit?

A $0.50 B $0.83 C $1.00 D $1.50

 
(Nov  07/1/Q28)  
  11
Q146  
29 A company manufactures a product.

Information for the last two years is as follows:

year 1 year 2
$ $

variable unit costs 6.00 7.00

fixed overheads per annum 24 000 25 200
unit sales price 10.00 10.00

In both years, production has been at break-even level.

© UCLES 2007 9706/01/O/N/07

What is the increase in production in year 2 compared with year 1?

increase in production

A 2400 units
B 3600 units
C 6000 units
D 8400 units
 
(Nov  07/1/Q29)  
30   The table shows figures for a week’s production.
 
  expected production 10 000 units
  expected production overhead $50 000
actual production overhead $60 000
under-absorption of overhead $5 000

What is the actual amount of production in the week?

 A $46 per patient day
B $100 per patient day
C $146 per patient day

  D $460 per patient day

Q147  
30 A video cassette has a selling price of $10.

cost per video cassette $

direct materials 1.20

direct labour 0.80
factory overhead (fixed) 1.40
royalty payment 1.00
administration overhead (fixed) 0.60

What is the contribution per video cassette?

A $5.00 B $6.00 C $7.00 D $8.00

 
(June  07/1/Q30)  
 
  2007
© UCLES 9706/01/M/J/07
10
Q148.  
28 A company makes two products.

product
X Y

$ $
selling price 10 12
variable costs per unit 4 8
maximum sales (units) 4 000 14 000

Fixed costs are $48 000.

4000 units of X are sold.

How many units of Y must be sold to break even?

 
A 2000 B 3000 C 6000 D 12 000

(June  07/1/Q28)  
29   A hospital budgets for overheads totalling $11 500 000 for a financial year. It expects to treat
  25 000 patients in the year. Each patient stays an average of 10 days and the hospital absorbs
overheads on a patient/day basis. Its direct costs for the year are budgeted at $25 000 000.
 
  What is its overhead absorption rate?
  A $46 per patient day
  B $100 per patient day
 
  C $146 per patient day
  D $460 per patient day
 
30   A video cassette has a selling price of $10.

cost per video cassette $

direct materials 1.20

direct labour 0.80
factory overhead (fixed) 1.40
 A absorption of overheads is based on actual expenditure and actual activity
B actual expenditure of overheads is below budget expenditure
C actual activity is above budgeted activity
D actual activity is below budgeted activity and actual expenditure is as budgeted

Q149.  
27 The cost of producing 2000 units of a product is shown.

insurance 2 000
labour 30 000
materials 10 000
rent 6 000
telephone rental 4 000

What is the variable cost of one unit?

A $20 B $22 C $23 D $24  

 
(June  
© UCLES 200707/1/Q27)   9706/01/M/J/07 [Turn over
 
 
Q150.   9

25 The break-even chart for a product is shown.

sales
revenue

total costs
costs and break-even
revenues point
$000

Y
sales volume

What does XY represent?

A fixed costs
B gross profit
C net loss
D variable costs
 
 
26 (June   07/1/Q25)  
What will cause under-absorption of fixed production overheads?
  A absorption of overheads is based on actual expenditure and actual activity
B actual expenditure of overheads is below budget expenditure
C actual activity is above budgeted activity
D actual activity is below budgeted activity and actual expenditure is as budgeted

27 The cost of producing 2000 units of a product is shown.

insurance 2 000