The cost of making or buying goods for sale is an example of what?

Select one:

a. Administration Costs

b. Payments to Employees

c. Cost of Sales

d. Revenue

How do expenses relate to payments?

Select one:

a. There is no relationship between expenses and payments.

b. Expenses usually give rise to a need to make a payment at some time but not necessarily at the time when the expense is incurred.

c. Expenses are exactly the same thing as payments and an expense is incurred at the exact moment that a payment is made.

d. Expenses are the difference between receipts and payments.

Raw materials used in the production of chemicals are a variable expense for Clark Casc Ltd. They vary in line with production.

A quantity of Chemical A costing 10 is used in the productionof 50kg of Product B.

How much does Clark Casc Ltd need to spend on Chemical A to produce 500kg of Product B?

Select one:

a. 10

b. 100

c. Either 100 or -100

d. Insufficient information provided

Helibeb Ltd is a training provider. For one of their core three-day training courses they require external consultants, who cost 1,500 each for the three days. Each consultant can train a maximum of 20 trainees, so that Helibeb's expenditure on hiring external training consultants for up to 100 trainees is as follows:

1,500 if there are between 1 and 20 trainees

3,000 if there are between 21 and 40 trainees

4,500 if there are between 41 and 60 trainees

6,000 if there are between 61 and 80 trainees

7,500 if there are between 81 and 100 trainees

What kind of cost is the hiring of external consultants for Helibeb?

Select one:

a. Step fixed cost

b. Variable cost

c. Semi-fixed cost

d. Capital cost

What is a semi-variable cost?

Select one:

a. A cost which has a fixed element and a variable element, so that the cost is (a + bx)for x units, where a is the fixed element and b per unit is the variable element.

b. A cost which remains the same over a range of production volumes but rises when the upperlimit of that range is exceeded.

c. A cost which varies with the level of production but also varies with the cost of labour or materials.

d. A cost which is treated as fixed for internal planning purposes but treated as variable for external reporting purposes.

Aircraft leasing is a fixed cost for Helibeb Airlines plc.

The cost of leasing aircraft to fly 2,400 passengers per month between Glasgow and San Francisco is 800,000 per month.

What is the cost per month of leasing aircraft to fly 1,800 passengers per month between Glasgow and San Francisco?

Select one:

a. 0

b. 400,000

c. 600,000

d. 800,000

Franz-Joseph has calculated the expected discounted cash flows for a prospective expansion project using a discount rate of 6%.

He has determined that the project has a positive net present value and recommended that it proceeds.

However, Michael has now asked him to change the discount rate to 7.5%.

Will Franz-Joseph still recommend that the project proceeds.

Select one:

a. Yes

b. No

c. Maybe

d. He will recommend that the project proceeds with 80% of its originally planned capacity.

You are asked to evaluate an expansionproject which has an investment cost of 5 million, to be paid in cash before the project is completed.

If the project goes ahead, it will produce net cash inflows of 1.25 million per year.

What is the payback period for the project once it is completed?

Select one:

a. 3 years.

b. 4 years

c. It depends on the non-cash expenditure

d. It depends on the discount rate.

Project New Machine involves the acquisition of a new machine whichwill be held for 10 years and then sold for scrap.

The new machine costs 35 million.

The annual revenue generated by using the machine is 40 million.

The annual costs of using the machine are:

Labour 17 million

Materials 10 million

Maintenance 2 million

Power 4 million

Depreciation of the Machine 3 million

Other Costs 2 million

What is the accounting rate of return for Project New Machine?

Select one:

a. 5.71%

b. 10.00%

c. 14.29%

d. 25.00%

Your new factory will generate a net cash inflow of 10 million in Year 3 of its operations (the third year after its construction).

Your discount rate for investment appraisal purposes is 10%.

What is the net present value of the net cash inflow for Year 3?

Select one:

a. 10,000

b. 7 million

c. 7.51 million

d. 13.31 million