imemsummaries.

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Exam
1)An activity with relatively high fixed costs compared with its variable costs is said to have a high
b) level of operating gear
2) Which example is NOT a variable cost for a hairdressing business
b) the salary of a hairdresser
3) Sparktly Ltd is a business that employs a number of electricians, the business undertakes a range
of work for its customers from repairing
c) 1,4 direct
4) which one of the following statements relating to sources of finance is correct?
a) retained profits are the major source of finance for most business
5) what is working capital
b) current assets less current liabilities
6) I Accounting rate of return is the average accounting profit from the project expressed as a
percentage of average investment
II Payback Period is much inferior to NPV and can offer a liquidity insight which might be a reason for
its widespread use.
a) I & II are correct
7) what are the factors influencing the discount rate (when making capital investment decisions)
c) interest, risk premium & inflation
8) What is contribution per unit?
d) all answers are correct
9) /
10) which one of the following statements relating to budget is NOT correct?
d) the creditors budget is opening balance + purchases cash receipt = closing balance
11) direct labour hours basis is regarded as the most logical basis for sharing over head between cost
units. What is a good reason for doing so?
c) direct labour hours are capable of being measured for each job
12) a restaurant managers salary would normally provide an example of
?) FIXED COSTS of operating the restaurant. The core to the restaurant of buying raw food would be
a typical U.C of operating the restaurant.
13) /
d) = makkelijk
14) which corrective action might a manager of a business decide to take if they found that debtors
were paying more slowly than anticipated?
e) all answers are true
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15) which might a business decide to hold or at least some of its assets in the form of cash
a) all statements are true
16) the salary of Frank Peters (head of IMEM) has to be put in the category
d) fixed / indirect
17) which remark on budgetizng is NOT correct
d) each budget forecasts coming costs, profits, sales or other items
18) if a manufacturer has a short term shortage of production facilities. In what way can this be
overcome?
)???
19) the OCC is
a) average inventories holding period + average period for receivables average payments period for
payables
20) would you expect the return of preference shares to be higher or lower than those of ordinary
shares?
d) the lever of risk associated with preference shares is higher.

Exercise:
8.2
10.1












imemsummaries.nl
Test exam
1)Let: S= sales revenue per unit, F= fixed costs per unit, V= variable costs per unit, TF= total fixed
costs and BEP = break-even point (in units)
What is the formula to be used when calculating the break-even point (in units) for a particular
product or service?
b) BEP = F/(S-V)
2) consider the following two statements concering costs:
1. Direct costs always vary directly with the level of output
2. Fixed costs always stay the same irrespective of the time period involved
Which oneo f the following combinations (true/false) relating to the above statement is correct?
d) false / false
3) two business produce the same product. Relevant information is as follows ..
Which one of the following combinations is true concerning the performance of Hawk Ltd relative to
that of Osprey Ltd.
c) lower / higher

4) considering the following two statements concerning cost volume profit analysis
1. The contribution per unit is the difference between the sales price per unit and the fixed costs per
unit
2. The marginal cost per unit will usually equal the variable cost per unit
Which one of the following combinations relating to the above statements is correct?
c) false / true
5) which one of the following statements relating to sources of finance is correct
d) finance leases involves the lessee (the used of the assets) taking substantially all the risks and
rewards of ownership
6)which one of the following methods of investment appraisal uses annual profits (losses) rather
than annual cash flows when evaluating investment opportunities?
b) Accounting rate of return
7) a activity with relatively high fixed costs compared with its variable costs is said to have a high
b) lever of operating gearing
8) a (n) . Cost is always an irrelevant cost when making decisions.
c) past
9) which example is NOT a variable cost for a restaurant?
b) the salary of the cook
10) looking at the controlling the cash balance the following graph has been made. Put the right word
to the right roman number (I,II,III,IV,V)
b) I Outer Limit, III Target Cash Balance, II Inner Limit, IV Inner Limit, V Outer Limit
imemsummaries.nl
11) Why is the net present value method of investment appraisal considered to be theoretically
superior to other methods that are found in practice? NPV takes accounts of
c) the objectives of the company
12) why are cash flows rather than profit flows used in the methods of investment appraisal?
a) cash flows are preferred to profit because cash is the ultimate measure of economic wealth
13) the general manager of an international company has to be put into the category:
d) fixed, indirect
14) which statements are true
I the operating cash cycle is: average inventories holding period + average period for receivables +
average payment period for payables
II each budget forecasts coming costs, profits, sales or other items
d) I and II are false
15) which one of the following methods of investments appraisal uses annual profits (loses) rather
than annual cash flows when evaluating investment opportunities?
b) accounting rate of return
16) indirect costs cannot be directly linked to individual cost
b) drivers
17) when considering a break-even chart, the .. range refers to the lever of possible
volumes of activity at which the business might operate
c) planned output
18) I NPV is much interior to Payback Period, but it is easy to understand and can offer a liquidity
insight, which might be the reason for its widespread use
II the direct-labour-hour basis of applying indirect costs to cost units is the most popular in practice
d) I is not correct, II is correct
19) I. a weakness of the break-even-analysis is that most businesses do not offer just one product or
service (multi-product businesses)
II. Overhead costs are direct costs
b) I is correct, II is not correct
20) what is working capital?
b) current assets less current liabilities

Self assignment 7.1
self assignment 12.9