AAT L2 Elements of Costing 5

Question 1

A time-based pay system means employees are paid based on:

Accepted Answer

The number of hours they work

Answer

The number of units they produce

Answer

The value of sales they generate

Answer

A fixed annual salary divided by output

Question 2

A manufacturing business has direct materials of £15,000, direct labour of £12,000, production overheads of £8,000, and administrative overheads of £5,000. What is the production cost?

Accepted Answer

£35,000

Answer

£27,000

Answer

£40,000

Answer

£30,000

Question 3

If fixed costs per unit decrease as output increases, this demonstrates that:

Accepted Answer

Fixed costs are being spread over more units

Answer

Total fixed costs are decreasing

Answer

Variable costs per unit are falling

Answer

The business is making more profit

Question 4

Which of the following cost behaviours describes a royalty paid per unit of output?

Accepted Answer

Variable cost

Answer

Fixed cost

Answer

Semi-variable cost

Answer

Stepped cost

Question 5

Contribution per unit is calculated as:

Accepted Answer

Selling price per unit minus variable cost per unit

Answer

Selling price per unit minus total cost per unit

Answer

Total revenue minus total fixed costs

Answer

Profit per unit plus fixed costs per unit

Question 6

A business sells a product for £50. Variable costs are £30 per unit and total fixed costs are £100,000. How many units must be sold to break even?

Accepted Answer

5,000 units

Answer

2,000 units

Answer

3,333 units

Answer

10,000 units