Q1. 2,000 items of Product R are made and sold. Each item generates a contribution of 4, and fixed overheads are 6,000. What is the margin of safety?

Q2. Hogg Ltd makes one product; the contribution per unit is 5, and fixed costs are 20,000. How many items must be sold to achieve a 100,000 profit?

. Q3. Darren Ltd is a construction company. It bought 2,000kg of Material Q for 4,000 on 15 July 2020, and 1,000kg has been used since then on various projects by Darren Ltd. The company has been asked to bid for a contract which would exhaust its existing inventory of Material Q. Alternatively, it could sell all its current inventory (1,000kg) to an overseas customer for 5,000. Material Q is widely available in the UK, where it sells for 4/kg, but it is rare overseas In making the bid for the contract, the relevant price of material Q (per kg) is

Q4. 3,000 items of Product C are made and sold. Each item generates a contribution of 5, and fixed overheads are 10,000. What is the margin of safety?

Q5. A companys fixed costs are 300,000, and its contribution per unit is 15. How many items must be sold to achieve a 150,000 profit?

Q6. A company owns a machine which it bought for 30,000 two years ago. The net book value is now 24,000, and the machine could be sold now for 27,000. A new machine of the same specification now costs 35,000. What is the opportunity cost of continuing to use the machine?

Q7. Which of these is NOT claimed as a benefit of divisionalisation? a) Autonomy of individual managers is increased. b) Divisions can undercut each other on price. c) Top management time is freed up. d) Divisional managers can gain valuable experience