ICAEW ACA Certificate Level · Business Insight and Performance

Costing and pricing

9 practice questions, each with the answer and an explanation.

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Random questions from this topic, one at a time. You see the answer and the explanation straight after each one.

All 9 questions

  1. How should the salary of a factory supervisor who oversees several production lines be classified?
  2. Budgeted production overheads are £360,000 and budgeted direct labour hours are 24,000. In the period actual direct labour hours were 23,100 and actual overheads £352,000. What is the over- or under-a…
  3. A business produced 10,000 units and sold 9,000 units, with no opening inventory. Fixed production overheads were £50,000 for the period. By how much does the profit under absorption costing differ fr…
  4. A product has direct materials of £8, direct labour of £6, variable overheads of £3 and absorbed fixed overheads of £5 per unit. What is its unit cost under marginal costing?
  5. A product's full cost is £22 per unit. The business sets its selling price at full cost plus a 30% mark-up. What is the selling price?
  6. A business raises its price from £20 to £22 and sales volume falls from 1,000 to 850 units. What is the price elasticity of demand and what happens to total revenue?
  7. A selling division has spare capacity and makes a component at a variable cost of £12 and a full cost of £16. The external market price is £20. What is the minimum transfer price to the buying divisio…
  8. A selling division is working at full capacity. Each component transferred internally means one external sale is lost. The component has a variable cost of £12 and sells externally for £20 with no ext…
  9. Which method of costing is required when valuing inventory in the published financial statements under IAS 2?

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