MMAC

Question 1

Prime cost

Answer 1

total of all direct costs

Question 2

What is included in absorption cost?

Answer 2

Direct costs + share of production overheads

Question 3

Bookkeeping for Normal Losses

Answer 3

credit process account

debit normal loss account

Question 4

CS Ratio

Answer 4

Contribution / Selling Price

Question 5

Units to Break Even

Answer 5

Fixed Costs / Contribution per Unit

Question 6

EOQ

Answer 6

√ ((2 x annual demand x cost of placing an order)/cost of holding one unit in inventory for one year)

Question 7

Break even in units

Answer 7

fixed costs/contribution per unit

Question 8

Margin of safety percentage

Answer 8

((current output - break-even output))/current output) x (100/1)

Question 9

Payback period months

Answer 9

(cumulative cash flow from last negative year / net cash flow from the first positive year) x 12 (round up to next full month and add to the full years)

Question 10

Not allowed for financial statements under IAS2?

Answer 10

Marginal costing

Question 11

Profit volume ratio

Answer 11

Contribution / Selling price

Question 12

Break-even Sales (£)

Answer 12

Fixed Costs / PV ratio (as a decimal not %)

Question 13

Marginal Production Cost

Answer 13

Direct material + Direct Labour + Variable Production Overheads

Question 14

Don’t flex

Answer 14

Fixed overheads

Question 15

Most important investment criteria

Answer 15

NPV

Question 16

Bookkeeping to issue materials to production

Answer 16

credit inventory

debit production