Situation 1

Unit cost of manufacture = 75. Unit Selling price = 120. What is the gross margin?

a) 45%

b) 37.5%

c) 137.5%

Situation 2

Volume of sales = 1000. Fixed costs = 100. If sales volume doubles, what will fixed costs be?

a) 100

b) 200

c) 150

Situation 3

The budget is phased. Total budget = 100,000. Activity in August and December is 50% of other months. What is monthly budget in June?

a) 8,333

b) 4,167

c) 9,091

Situation 4

A project will make a return of 100,000 in 5 years time. If the cost of money is 7% per annum what is the value in today’s money?

a) 71,298

b) 140,255

c) 100,000

Situation 5

A company’s P&L shows a 25% increase in cost of sales but only a 10% increase in Sales Turnover. Which of the alternatives is unlikely to be true?

a) The company has reduced prices which has increased sales volume.

b) The company has experienced major manufacturing problems.

c) The company has raised its prices to increase margin.

Situation 6

On a set of management accounts, the variance between plan and actual is (25). What does this mean?

a) Performance is 25 below than plan

b) Performance is 25 better than plan

c) The actual performance is 25

Situation 7

A company has a debt/equity ratio of 45%. What does this mean?

a) 45% of the funds used in the company come from loans and 55% from shareholders.

b) 45% of the funds used in the company come from shareholders and 55% from loans.

c) 45% of its long term debt is in the form of bonds.

Situation 8

The net profit of a company is 150. Its shareholders funds are shown as 750. Its total assets are listed as 2000. What is the company’s return on assets (ROA)?

a) 20%

b) 7.5%

c) 37.5%

Situation 9

Where would you find the figure for gross profit for the year?

a) Balance sheet

b) P&L

c) Management accounts

Situation 10

Where would you find the figure for accumulative depreciation?

a) Balance sheet

b) P&L

c) Management accounts