Question 1
Using the following data, calculate Return on total Capital Employed (ROCE):
|
£1 Ordinary Shares
|
£100,000
|
|
10% Loan
|
£200,000
|
|
Current Liabilities
|
£100,000
|
|
Net Profit before Interest and Taxes
|
£50,000
|
|
Taxation Rate
|
30%
|
30%
16.7%
25%
21%
Question 2.
In the context of financial structure, which of the following statements is not true?
A. high levels of gearing may be perceived as risky, because of the company's commitment to pay a given sum of interest, regardless of how much profit is generated
B. as long as the return generated from borrowed funds exceeds the rate of interest payable, the ordinary shareholders will benefit.
C. the interest cover ratio equals the rate of interest payable on a loan
D. the gearing ratio considers the significance of a company's debt relative to equity
Question 3.
Which of the following is not a cost associated with holding inventory?
obsolesence
insurance
deterioration
depreciation
Question 4.
Which of the following statements about the Statement of Financial Position is not true?
A.total assets = total liabilities + equity
B. total assets - total liabilities = shareholders' funds
C. total equity + total assets + total liabilities = shareholders' funds
D. non current assets + current assets - total liabilities = equity
Question 5.
If current assets are £40,000, the current ratio is 2:1 and the acid test is 1.5:1, then the value of inventory is:
£80,000
£10,000
£40,000
£20,000
Question 6.
If current assets are £30,000, and the current ratio is 1.5, then the value of current liabilities is:
£10,000
£45,000
£30,000
£20,000
Question 7.
Which of the following would definitely improve both gross profit as reported in the Income Statement and gross profit margin (assuming cost price per unit stays the same)?
Selling more units at a higher selling price per unit.
Selling more units at a lower selling price per unit.
Selling fewer units at a higher selling price.
Selling fewer units at a lower selling price.
Question 8.
How would an increase in administration costs affect reported profits?
Decrease Operating Profit, but has no effect on Gross Profit.
No impact on Operating Profit but will decrease Gross Profit.
No impact on Operating Profit, but will increase Gross Profit.
Increase Operating Profit, but decreases Gross Profit.
Question 9
Using the following data, calculate Return on Shareholder's Funds (ROSF):
|
£1 Ordinary Shares
|
£200,000
|
|
Long term loan at 10% interest
|
£100,000
|
|
Net Profit before Interest and Taxes
|
£50,000
|
|
Taxation Rate
|
30%
|
14%
16.7%
21%
30%
Question 10.
Which of the following would reduce net profit but have no effect on gross profit?
negotiating a lower purchase price for raw materials
an increase in IT support costs for the accounting package used
reducing the commission rate paid to salesmen
a reduction in spend on training of distribution staff
Question 11
Company Y has 2 product lines which both use the same principal raw material, Ramal. Each unit of product Omega requires 1.5 kg of material Ramal and each unit of product Delta requires 7kg of the material.
The company plans to make 5,000 units of product Omega in June & 3,000 units of product Delta.
The company will have 2,000 kg of Ramal in stock at the beginning of June & intends to decrease this stock level by 10% by the end of June. The company always orders 5% over and above its total identified needs to allow for wastage and pilferage.
How many kgs of Ramal should the company order for June?
A. 28,500 kg
B. 28,300 kg
C. 28,700 kg
D. 29,715 kg
Question 12
The standard labour time to make one unit of product L is 2 hours, with a standard hourly wage rate of £6. During May 500 units were made. The actual labour bill for the month, during which 1,020 hours were worked was £6,273. What is the labour efficiency variance?
A. £153A
B. £153F
C. £273F
D. £120A
Question 13
Which of the following statements about flexible (flexed) budgets is true?
A. Budgets prepared under flexible budgeting include variable costs only.
B. Flexible budgeting is often applied during the control phase.
C. A company cannot apply both fixed and flexible budgeting within its system.
D. use of flexible budgets ensures that no variances arise
Question 14
Which of the following is not a possible explanation for a favourablelabour efficiency variance?
A. use of staff of a higher grade than expected
B. an error in the standard labour time allowance per unit
C. staff attended a training programme following installation of improved production equipment
D. inflationary increase in hourly wage rate was lower than expected
Question 15
Which of the following statements does not identify a purpose of standard costing?
A. to act as a control device by highlighting those activities which do not conform to plan
B. to assist in evaluating performance
C. to predict market demand for a product at a given selling price
D. to assist in budget setting & forecasting of costs
Question 16
Which of the following is not a possible cause of an adverse materials usage variance?
A. an inaccurate standard
B. the supplier charged a higher price than expected for the materials
C. deployment of less skilled staff than anticipated
D. use of less precise tools and equipment than anticipated.
Question 17
5. A company's product has the following profile;
marginal cost per unit £30
selling price per unit £48
Given that total fixed overheads for the period are £180,000, what is the break-even point?
A. 10,000 units
B. 3,750 units
C. 4,500 units
D. 2,308 units
Question 18
4. The standard labour time to make one unit of product L is 2 hours, with a standard hourly wage rate of £6. During May 500 units were made. The actual labour bill for the month, during which 1,020 hours were worked, was £6,273. What is the labour rate variance?
A. £153A
B. £273 F
C. £120A
D. £153F
Question 19
Vicary Ltd plans to sell 14,000 units in the coming period. Its fixed costs are predicted to be £64,000. The unit selling price for its product is £25 & the marginal cost per unit is £20. Which one of the following does not describe its margin of safety?
A. 8.6%
B. £30,000 sales revenue
C. 1,200 units
D. 2,560 units
Question 20
The standard cost card for product Z indicates that each unit requires 2kg of material, at a standard price of £2.50 per kg. In January 2,000 units of product Z were manufactured from 3875 kg, costing £9,920 in total. What was the materials price variance?
A. £232.50 adverse
B. £232.50 favourable
C. £125 favourable
D. £312.50 favourable