Q. A business forecasts a growth rate of 10% per year. If its current revenue is $500,000, what will its revenue be in 2 years?
A.
$550,000
B.
$605,000
C.
$610,000
D.
$620,000
Show solution
Solution
Future revenue can be calculated using the formula: future value = present value * (1 + growth rate)^number of years. Thus, $500,000 * (1 + 0.10)^2 = $500,000 * 1.21 = $605,000.
Correct Answer:
B
— $605,000
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Q. A business forecasts sales of 2,000 units at a price of $50 each. What is the expected total sales revenue?
A.
$80,000
B.
$90,000
C.
$100,000
D.
$110,000
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Solution
Total Sales Revenue = Forecasted Sales x Price per Unit = 2,000 x $50 = $100,000.
Correct Answer:
C
— $100,000
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Q. A business has a current ratio of 2:1. If its current liabilities are $50,000, what are its current assets?
A.
$100,000
B.
$150,000
C.
$200,000
D.
$250,000
Show solution
Solution
Current ratio is calculated as current assets divided by current liabilities. If the current ratio is 2:1 and current liabilities are $50,000, then current assets = 2 * $50,000 = $100,000.
Correct Answer:
A
— $100,000
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Q. A business has a profit margin of 15%. If the total sales are $200,000, what is the profit?
A.
$25,000
B.
$30,000
C.
$35,000
D.
$40,000
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Solution
15% of $200,000 is $30,000, which is the profit.
Correct Answer:
B
— $30,000
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Q. A business has assets worth $1,000,000 and liabilities of $600,000. What is the owner's equity?
A.
$400,000
B.
$600,000
C.
$1,000,000
D.
$500,000
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Solution
Owner's Equity = Assets - Liabilities = 1,000,000 - 600,000 = $400,000.
Correct Answer:
A
— $400,000
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Q. A business has fixed costs of $10,000 and a contribution margin of $15 per unit. How many units must be sold to break even?
A.
500
B.
600
C.
700
D.
800
Show solution
Solution
Break-even point (units) = Fixed costs / Contribution margin per unit = $10,000 / $15 = 667 units (rounded to 600 for options)
Correct Answer:
B
— 600
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Q. A business has fixed costs of $20,000 and variable costs of $5 per unit. If the selling price is $15 per unit, how many units must be sold to break even?
A.
2,000 units
B.
1,000 units
C.
4,000 units
D.
3,000 units
Show solution
Solution
Break-even point = Fixed Costs / (Selling Price - Variable Cost) = 20,000 / (15 - 5) = 2,000 units.
Correct Answer:
A
— 2,000 units
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Q. A business has fixed costs of $50,000 and a contribution margin of $10 per unit. How many units must be sold to break even?
A.
5,000
B.
4,000
C.
6,000
D.
3,000
Show solution
Solution
Break-even point (units) = Fixed costs / Contribution margin = $50,000 / $10 = 5,000 units
Correct Answer:
A
— 5,000
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Q. A business incurs a loss of 15% on selling a product for $425. What was the cost price?
A.
$500
B.
$450
C.
$400
D.
$350
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Solution
Let the cost price be x. Selling Price = Cost Price - Loss = x - 0.15x = 0.85x. Therefore, 0.85x = 425, x = 425 / 0.85 = $500.
Correct Answer:
A
— $500
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Q. A business sells a product for $60 and incurs a variable cost of $30 per unit. What is the contribution margin per unit?
A.
$20
B.
$30
C.
$40
D.
$50
Show solution
Solution
Contribution Margin = Selling Price - Variable Cost = $60 - $30 = $30.
Correct Answer:
C
— $40
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Q. A company aims to increase its market share by 10% over the next year. If its current market share is 25%, what will be its target market share?
A.
30%
B.
35%
C.
40%
D.
45%
Show solution
Solution
Increasing 25% by 10% gives a target market share of 30%.
Correct Answer:
A
— 30%
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Q. A company budgeted $200,000 for direct materials but actually spent $220,000. What is the direct materials variance?
A.
$20,000 Favorable
B.
$20,000 Unfavorable
C.
$40,000 Favorable
D.
$40,000 Unfavorable
Show solution
Solution
Direct materials variance = Actual Cost - Budgeted Cost = $220,000 - $200,000 = $20,000 Unfavorable.
Correct Answer:
B
— $20,000 Unfavorable
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Q. A company budgeted $200,000 for production costs but incurred $220,000. What is the variance?
A.
$20,000 Favorable
B.
$20,000 Unfavorable
C.
$200,000 Favorable
D.
$200,000 Unfavorable
Show solution
Solution
Variance = Actual Costs - Budgeted Costs = $220,000 - $200,000 = $20,000 Unfavorable.
Correct Answer:
B
— $20,000 Unfavorable
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Q. A company budgeted for $200,000 in production costs but incurred $220,000. What is the cost variance?
A.
$20,000 Favorable
B.
$20,000 Unfavorable
C.
$40,000 Favorable
D.
$40,000 Unfavorable
Show solution
Solution
Cost variance = Actual Costs - Budgeted Costs = $220,000 - $200,000 = $20,000 Unfavorable.
Correct Answer:
B
— $20,000 Unfavorable
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Q. A company budgeted for 5,000 hours of labor at a rate of $20 per hour. If the actual labor cost was $110,000 for 6,000 hours, what is the labor efficiency variance?
A.
$10,000 Favorable
B.
$10,000 Unfavorable
C.
$20,000 Favorable
D.
$20,000 Unfavorable
Show solution
Solution
Labor Efficiency Variance = (Actual Hours - Budgeted Hours) * Budgeted Rate = (6,000 - 5,000) * $20 = $20,000 (Unfavorable)
Correct Answer:
B
— $10,000 Unfavorable
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Q. A company decides to adopt a flat organizational structure to enhance decision-making speed. Which principle of management does this reflect?
A.
Centralization
B.
Decentralization
C.
Unity of command
D.
Span of control
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Solution
Decentralization allows for quicker decision-making by distributing authority across various levels of the organization.
Correct Answer:
B
— Decentralization
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Q. A company expects to sell 1,000 units at a price of $20 each. If the variable cost per unit is $12, what is the expected total contribution margin?
A.
$8,000
B.
$6,000
C.
$4,000
D.
$2,000
Show solution
Solution
Total contribution margin = (Selling price - Variable cost) * Number of units = ($20 - $12) * 1,000 = $8,000
Correct Answer:
A
— $8,000
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Q. A company has 100 units of inventory purchased at $5 each and 50 units purchased at $8 each. If it sells 80 units using FIFO, what is the ending inventory value?
A.
$200
B.
$240
C.
$280
D.
$400
Show solution
Solution
Under FIFO, the first 80 units sold are from the $5 batch (100 units), leaving 20 units at $5 and 50 units at $8. Ending inventory = (20 * $5) + (50 * $8) = $100 + $400 = $500.
Correct Answer:
B
— $240
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Q. A company has 150 units at $30 and 100 units at $35. If it sells 120 units using FIFO, what is the ending inventory value?
A.
$1,050
B.
$1,200
C.
$1,500
D.
$1,800
Show solution
Solution
Under FIFO, the first 120 units sold are from the $30 batch (150 units), leaving 30 units at $30 and 100 units at $35. Ending inventory = (30 * $30) + (100 * $35) = $900 + $3,500 = $4,400.
Correct Answer:
C
— $1,500
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Q. A company has 200 units of inventory at $10 each and 300 units at $15 each. If it sells 250 units using LIFO, what is the ending inventory value?
A.
$1,000
B.
$1,250
C.
$1,500
D.
$1,750
Show solution
Solution
Under LIFO, the last 250 units sold are from the $15 batch (300 units), leaving 50 units at $15 and 200 units at $10. Ending inventory = (50 * $15) + (200 * $10) = $750 + $2,000 = $2,750.
Correct Answer:
C
— $1,500
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Q. A company has 500 units at $10 each and 300 units at $12 each. If it sells 400 units using LIFO, what is the cost of goods sold?
A.
$4,800
B.
$4,600
C.
$4,400
D.
$4,200
Show solution
Solution
Under LIFO, the cost of goods sold for the last 400 units sold is (300 * $12) + (100 * $10) = $3,600 + $1,000 = $4,600.
Correct Answer:
A
— $4,800
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Q. A company has a budgeted direct material cost of $30,000 but incurs $32,000. What is the direct material variance?
A.
$2,000 Favorable
B.
$2,000 Unfavorable
C.
$1,000 Favorable
D.
$1,000 Unfavorable
Show solution
Solution
Direct Material Variance = Actual Cost - Budgeted Cost = $32,000 - $30,000 = $2,000 Unfavorable.
Correct Answer:
B
— $2,000 Unfavorable
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Q. A company has a budgeted fixed overhead of $100,000 and actual fixed overhead of $90,000. What is the fixed overhead variance?
A.
$10,000 Favorable
B.
$10,000 Unfavorable
C.
$20,000 Favorable
D.
$20,000 Unfavorable
Show solution
Solution
Fixed Overhead Variance = Actual Fixed Overhead - Budgeted Fixed Overhead = $90,000 - $100,000 = -$10,000 (Favorable)
Correct Answer:
A
— $10,000 Favorable
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Q. A company has a budgeted sales revenue of $500,000 and actual sales revenue of $450,000. What is the sales variance?
A.
$50,000 Favorable
B.
$50,000 Unfavorable
C.
$100,000 Favorable
D.
$100,000 Unfavorable
Show solution
Solution
Sales Variance = Actual Sales - Budgeted Sales = $450,000 - $500,000 = -$50,000 (Unfavorable)
Correct Answer:
B
— $50,000 Unfavorable
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Q. A company has a budgeted sales volume of 10,000 units at $20 each. If actual sales are 9,000 units at $22 each, what is the sales volume variance?
A.
$2,000 Favorable
B.
$2,000 Unfavorable
C.
$10,000 Favorable
D.
$10,000 Unfavorable
Show solution
Solution
Sales volume variance = (Actual units - Budgeted units) * Budgeted price = (9,000 - 10,000) * $20 = -$20,000, which is $2,000 Favorable.
Correct Answer:
A
— $2,000 Favorable
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Q. A company has a budgeted sales volume of 5,000 units at a selling price of $50 per unit. What is the total budgeted revenue?
A.
$250,000
B.
$200,000
C.
$300,000
D.
$150,000
Show solution
Solution
Total Budgeted Revenue = Sales Volume * Selling Price = 5,000 * $50 = $250,000.
Correct Answer:
A
— $250,000
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Q. A company has a budgeted variable cost of $3 per unit for 10,000 units. If the actual variable cost is $4 per unit for 12,000 units, what is the total variable cost variance?
A.
$12,000 Favorable
B.
$12,000 Unfavorable
C.
$24,000 Favorable
D.
$24,000 Unfavorable
Show solution
Solution
Total Variable Cost Variance = (Actual Cost - Budgeted Cost) = ($4 * 12,000) - ($3 * 10,000) = $48,000 - $30,000 = $18,000 (Unfavorable)
Correct Answer:
D
— $24,000 Unfavorable
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Q. A company has a debt of $100,000 and equity of $50,000. What is its debt-to-equity ratio?
A.
2:1
B.
1:2
C.
1:1
D.
3:1
Show solution
Solution
Debt-to-Equity Ratio = Total Debt / Total Equity = 100,000 / 50,000 = 2:1.
Correct Answer:
A
— 2:1
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Q. A company has a fixed cost of $60,000 and a contribution margin of $15 per unit. How many units must be sold to achieve a profit of $24,000?
A.
5,600
B.
4,000
C.
3,200
D.
6,000
Show solution
Solution
Required units = (Fixed costs + Target profit) / Contribution margin per unit = ($60,000 + $24,000) / $15 = 5,600 units.
Correct Answer:
A
— 5,600
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Q. A company has a goal to increase sales by 25% over the next year. If current sales are $200,000, what will be the target sales?
A.
$225,000
B.
$250,000
C.
$275,000
D.
$300,000
Show solution
Solution
To find the target sales, calculate 25% of $200,000, which is $50,000. Adding this to the current sales gives $250,000.
Correct Answer:
A
— $225,000
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