AAT L2 Elements of Costing 2

Question 1

The prime cost of a product is calculated as:

Accepted Answer

Direct materials + Direct labour + Direct expenses

Answer

Direct materials + Direct labour + Production overheads

Answer

Total production cost minus profit

Answer

Selling price minus total cost

Question 2

A manufacturing business produces 10,000 units. Fixed costs are £50,000 and variable costs are £3 per unit. What is the total cost?

Accepted Answer

£80,000

Answer

£30,000

Answer

£50,000

Answer

£53,000

Question 3

Cost centres are best described as:

Accepted Answer

Sections of the business to which costs can be charged for control purposes

Answer

The different types of costs a business incurs

Answer

The customers who buy products from the business

Answer

The bank accounts used by the business

Question 4

Overheads are also known as:

Accepted Answer

Indirect costs

Answer

Direct costs

Answer

Prime costs

Answer

Variable costs

Question 5

If a product has a total cost of £25 and is sold with a 40% mark-up on cost, what is the selling price?

Accepted Answer

£35.00

Answer

£65.00

Answer

£15.00

Answer

£10.00

Question 6

Which of the following is classified as an administrative overhead?

Accepted Answer

Salary of the finance team

Answer

Depreciation of factory machinery

Answer

Raw material wastage

Answer

Delivery driver wages