ACCA Applied Knowledge · Management Accounting · Presenting information
A budget model contains these cells: B1 = 4,000 (units), B2 = 12 (selling price per unit in $), B3 = 5 (variable cost per unit in $), B4 = 18,000 (fixed costs in $). Cell B5 contains =B1*(B2-B3)-B4. The accountant changes B1 to 4,500 and B3 to 6, leaving other cells unchanged. What value will B5 now display?
B5 will display 9,000. The new contribution per unit is $6 (12 less 6), so 4,500 units give contribution of 27,000. Deducting fixed costs of 18,000 leaves 9,000. The figure 10,000 is the original profit and 27,000 ignores fixed costs.
- A9,000Correct
- B10,000
- C27,000
- D9,000 less than the original profit
Explanation
New contribution per unit is 12 - 6 = 6. Total contribution is 4,500 x 6 = 27,000. Subtracting fixed costs of 18,000 gives 9,000. Check: original was 4,000 x 7 - 18,000 = 10,000, so the 10,000 option is the original figure, and 27,000 omits fixed costs.
Did you get it right without looking?
One question tells you little. A timed set on Presenting information shows your real accuracy, how long you take and where you lose marks.
More Presenting information questions
- A finance manager is preparing a presentation for the board showing how total costs of $800,000 divide between five cost categories, with th…
- Which of the following is a characteristic of a well-designed table of management information?
- A finance team shows a bar chart of profit by division. The vertical axis starts at $480,000 instead of zero, so that profits of $500,000 an…
- A sales manager wants to show how total monthly revenue of $240,000 is split between four product lines so that readers can see each line's …
- Monthly sales of three products are to be presented to the board: Alpha $40,000, Beta $35,000 and Gamma $25,000. The aim is to show each pro…
- A finance manager wants to show the board how total sales of $800,000 are divided between four product lines, so that the relative proportio…