Refer to the exhibit.

X Enterprises runs a private nursing home for the elderly. The company are concerned that bed occupancy rates have been falling over the past 2 years with a consequential effect on profit.

They have drawn up a budget for next year as follows:

The nursing home currently charges $90 per patient day.

The nursing home operates at 7,500 patient days per year. In an effort to increase occupancy rates the company are proposing to reduce the current price by 10% and increase spending on advertising by $10,000 each year.

What effect will this have on the margin of safety?

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In a manufacturing company which produces a range of products, the production manager’s salary would be classified as A.

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The wages of a machine operator who is paid a guaranteed minimum wage plus a bonus for each unit produced would be described as A.

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SP Limited operates an absorption costing system. It uses a predetermined overhead absorption rate based on machine hours. Budgeted factory overheads for the year were £1,080,000 but actual overhead incurred was £1,046,000. Budgeted machine hours were 120,000 and actual machine hours were 119,000.

Overheads for the period were.

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The variable overhead efficiency variance is:

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Refer to the Exhibit.

Zepher Ltd. manufactures three products, which require the same type of machine. The following fixed cost and profit per unit is available:

In a period in which machine hours are in short supply, which of the following options is the rank order of production?

Answer is:

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CORRECT TEXT

A company operates a full cost system of pricing. Production overheads are absorbed using a pre-determined absorption rate of £3.50 per machine hour. The direct production cost of product A is £15 per unit and it utilises 6 machine hours per unit. The mark-up for non-production costs is 10% of total production cost. The company applies a 25% mark-up on total cost for all products.

The required selling price for Product A, to two decimal places, is:

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CORRECT TEXT

Refer to the Exhibit.

The following details have been extracted from the receivables collection records of SBC:

The amount budgeted to be received in September from credit sales is, to the nearest £000:

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Each finished carton of product P contains 15 litres of liquid L. During the production process there is an unavoidable loss of 20% of the liquid input. The standard price of liquid L is $2 per litre.

The standard ingredient cost for liquid L shown on the standard cost card for one carton of product P will be

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The following costs are incurred by a company which owns a five star hotel.

Which THREE of the items would normally be classified as variable costs?

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