Miss ZAIRA ANIS

CAT- Introductory level (T2)

Practice material
Duration: 45 minutes

1. Which graph represent what

a)

___________________.

b)

___________________.

c)

______________________.

d)

_________________.

1 Prepared by:
Zaira Anees
e)

___________.

Q2. Following are some details given about some expenses of company
Expense at Expense at Expense at Expense at
500 units 1000 units 2000 units 2,500 units
£ £ £
Expense A 2,000 2,000 2,000 2,000
Expense B 8,000 8,000 9,000 9,000
Expense B 625 1,250 2,500 3,125
Expense C 400 800 1,600 2,000
Expense D 2,500 5,000 12,000 15,000
Expense E 11,500 16,500 26,500 31,500
Required: -
Classify above costs according to their behaviors that either they are fixed, variable or
semi variable.
A __________________.
B __________________.
C __________________.
D __________________.
E __________________.

Q3. The production manager is paid a salary of £650 per month plus an extra payment of
£5 per unit for each unit produced. The salary of the manager will be classified as
A. variable cost
B. fixed cost
C. semi variable cost
D. step cost

Q4. Fixed cost per unit

A. decreases when production level decreases
B. decreases when production level increases
C. remain same

Q5. Variable cost per unit

A. varies when output varies
B. remain constant
C. increases as output increases
D. decreases when output increases

2 Prepared by:
Zaira Anees
 Q6. An example of fixed cost is
A. Material cost
B. Labour cost
C. rent of factory
D. telephone expense

Q7. Which of the following would be classified as a fixed cost in the operation of a
motor vehicle?
A Oil change every 10,000 kilometres B Petrol
C Insurance D Tyre replacement

Q8. Following are some details given about three months of a manufacturing company
Month Production (units) Total cost (£)
1 1,000 2,500
2 2,000 4,500
3 1,200 2,800
Required: -
a. By using high low method calculate
i. Variable cost per unit
ii. Total fixed cost
b. Calculate total cost of 3,000 units

Q9. Following are some details given about three months of a manufacturing company
Month Production (units) Total cost (£)
January 500 13,000
February 600 13,800
March 550 13,550
Required: -
By using high low method calculate
i. Variable cost per unit
ii. Total fixed cost
iii. Calculate total cost of 3,000 units

Q10. Following are some details given about three months of a manufacturing company
Production (units) Total cost (£)
2,000 30,000
4,000 50,000
3,200 42,800
Required: -
By using high low method calculate
i. Variable cost per unit
ii. Total fixed cost
iii. Calculate total cost of 3,000 units

3 Prepared by:
Zaira Anees