Page 293 - BA2 Integrated Workbook STUDENT 2018
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Supplementary objective test questions
CHAPTER 13 – SHORT-TERM DECISION MAKING
Questions 13.1 and 13.2 are based on the following information.
A company manufactures a single product which has the following cost structure
based on a production and sales budget of 10,000 units.
$
Direct materials (4 kg at $3 per kg) 12
Direct labour hours (5 hours at $7 per hour) 35
Variable overheads are incurred at $8 per direct labour hour.
Other costs include:
$
Fixed production overheads 120,000
Selling and distribution overheads 160,000
Fixed administration overheads 80,000
The selling and distribution overheads include a variable element due to a distribution
cost of $2 per unit. Selling price is $129 per unit.
13.1 How many units must be sold for the company to break even?
A 8,500
B 9,000
C 9,500
D 1,000
13.2 The level of revenue which would generate a net profit of $40,000 is? (to the
nearest $000)
A $1,000,000
B $1,226,000
C $1,300,000
D $1,325,000
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