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% 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 3. Which of the following is not a cost associated with holding inventory? obsolesence insurance deterioration depreciation 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 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 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 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. 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. 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% 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 1 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 ...

1. 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%
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

2. 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
3. Which of the following is not a cost associated with holding
inventory?
obsolesence
insurance
deterioration
depreciation
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'

3. funds
D. non current assets + current assets - total liabilities =
equity
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
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
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)?

4. 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.
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.
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

5. 30%
14%
16.7%
21%
30%
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 1
Company Y has 2 product lines which both use the same
principal raw material, Ramal. Each unit of product Omega

6. 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 2
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

7. C.
£273F
D.
£120A
Question 3
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 4
Which of the following is nota possible explanation for a
favourable labour 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

8. improved production equipment
D. inflationary increase in hourly wage rate was lower than
expected
Question 5
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 6
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

9. C. deployment of less skilled staff than anticipated
D. use of less precise tools and equipment than anticipated.
Question 7
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 8
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

10. B.
£273 F
C.
£120A
D.
£153F
Question 9
Q1. 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 notdescribe its margin of
safety?
A.
8.6%
B.
£30,000 sales revenue
C.
1,200 units
D.
2,560 units
Question 10
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?

11. A. £232.50 adverse
B. £232.50 favourable
C. £125 favourable
D. £312.50 favourable