mcq costing :/

[osama1122]

q1
The table shows costs at three activity levels.
activity levels 65 units 90 units 100 units
$ $ $
fixed cost ? ? ?
variable cost ? ? ?
total cost 15 600 19 600 21 200
What is the fixed cost?
A $1600 B $4000 C $5200 D $5600

q2
A company has total production costs of $6000 to make 10 000 units, and $13 000 to make
24 000 units.
What is its total cost to make 20 000 units?
A $1000 B $10 000 C $11 000 D $12 000

 

[ruzache]

q1 use simultaneous equations.

Let X be the variable cost per unit. Let Y be the total fixed cost.

Total variable cost is found by multiplying number of units into variable cost per unit (X). Therefore the 2 following equations are made:

65X + Y = 15600.....(1)
90X + Y = 19600.....(2)

You can use the scientific calculator to solve them or the manual method.
Manual method:
Subtract equation (2) from (1)
(2)-(1)=>
65X + Y -(90X + Y) = 15600-19600
65X + Y -90X - Y = -4000
-25X = -4000 {because the (+)Y and (-)Y cancel out}
hence, X = 160

substitute X in equation (1):
65(160) + Y = 15600
Y = 5200 { which is total fixed cost.
answer is C

 

[ruzache]

same for question 2:

10000X + Y = 6000.....(1)
24000X + Y = 13000....(2)

Y is fixed cost. use the calculator equation mode. (if you need help on how to use the calculator to solve simultaneous ask)

Y = 1000

answer is A

ps. there is also another method called high-low method. if u want to know that also ask.

 

[osama1122]

thankyou ..God bless you

 

[osama1122]

On 1 January 2009 a business had prepaid rent of $50. During 2009, three rent payments were
made of $250 each. On 31 December 2009, the business still owes $200 rent on account for
2009.
The business owner has charged the rent payments made during 2009 in his income (profit and
loss) account.
What is the effect on net profit?
A $200 too high
B $200 too low
C $250 too high
D $250 too low

 

[ruzache]

draw a rent account:

rent a/c
---------------------------------------------------------------
balance b/d............50|
bank($250x3)........750|P/L ac..................1000
balance c/d...........200|

balance b/d on debit side because prepaid expense is an asset. balance c/d on debit side because the b/d balance (for the next accounting period) should be on the credit side because outstanding expense is a liability. payments are on the debit because its an outflow of funds from the bank. the balancing figure will be the amount charged to the P/L account (50+750+200=1000).

however owner has made a mistake by charging 750 (which is the bank payment and not the amount to be charged for that year). therefore another 250 should have been charged. so the NP is 250 too low

 

[mohsinsrk]

same for question 2:

10000X + Y = 6000.....(1)
24000X + Y = 13000....(2)

Y is fixed cost. use the calculator equation mode. (if you need help on how to use the calculator to solve simultaneous ask)

Y = 1000

answer is A

ps. there is also another method called high-low method. if u want to know that also ask.

why cant we use that eq 2 - eq 1 method

 

[ruzache]

same for question 2:

10000X + Y = 6000.....(1)
24000X + Y = 13000....(2)

Y is fixed cost. use the calculator equation mode. (if you need help on how to use the calculator to solve simultaneous ask)

Y = 1000

answer is A

ps. there is also another method called high-low method. if u want to know that also ask.

why cant we use that eq 2 - eq 1 method

You can use that too but to put it into the calculator and get the answer is faster