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Fundamentals of Management Accounting Questions 106–110 (page: 23)

Updated On: 9-Feb-2026

CORRECT TEXT

The variable cost of a product is £7 per unit. The fixed costs of the product are £140,000.
The break-even point is 70,000 units.

The selling price of the product is:

Give your answer to 2 decimal places.

  1. £9.03

Answer(s): A



Refer to the exhibit.


The management accountant has completed the appraisal of a project which is forecast to generate the following cash flows.

It has now been discovered that the cash inflow in year 3 has been overestimated.

What will be the effect on the calculated net present value (NPV) and the payback period?

  1. NPV increase; payback period increase
  2. NPV decrease; payback period increase
  3. NPV decrease; payback period stay the same
  4. NPV decrease; payback period decrease

Answer(s): C



Refer to the exhibit.



ZAP publishes a monthly magazine aimed at the teenage market. It has drawn up a budget for next year as follows:

What selling price would be required for ZAP to break even?

  1. $1.65
  2. $1.20
  3. $1.25
  4. $0.80

Answer(s): A



Why is it important to have a professional body such as CIMA in management accounting?

  1. Ensures certain standards are set and maintained
  2. To increase the employability of accountants
  3. Regulates the amount accountants in circulation
  4. Helps make sure certain standards are set and maintained
  5. To punish those who breach standards

Answer(s): A



Refer to the exhibit.



The following budget and actual data are available for last period.

The sales price variance for last period was

  1. $3,704 adverse
  2. $10,156 favourable
  3. $13,356 favourable
  4. $13,860 favourable

Answer(s): A



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