A Small Company Has One Factory but Produces Several Different

question 9

Multiple Choice

A small company has one factory but produces several different products.
It has direct material and direct labour costs which are allocated to the different products directly.
The factory is machine intensive,rather than labour intensive.
It also has overheads such as rent,rates and electricity costs.
As well as the factory,it also has a staff canteen and a maintenance department.
Which of the following statements about Absorption Costing is INCORRECT?

• A) Where possible, costs should be directly allocated, such as direct material and direct labour in producing each product.
• B) Costs that cannot be allocated may be apportioned, for example rent based on floor area.
• C) Other overheads such as maintenance and canteen costs may be absorbed using machine hours.
• D) Overheads that are incurred in overhead areas cannot be absorbed - eg maintenance of the canteen

Identify the characteristics and differences between major stock exchanges.

Comprehend the role of investment banking firms in assisting corporations to sell securities in the primary market.

Understand the definitions and characteristics of money, including its roles as a medium of exchange, a measure of value, and a store of value.

Distinguish between different forms of money such as fiat money, cryptocurrencies, and physical currency.

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Definitions:

Maximum Price

A price ceiling set by the government to prevent prices from soaring to levels that are too high for most consumers to afford.

Profit-maximizing Level

The output level at which a firm achieves the highest profit, where marginal cost equals marginal revenue.

Pure Monopolist

A single seller in a market that produces a unique product or service without close substitutes, controlling the entire supply.

Fair Return

A profit level that allows a business to maintain its operations and justify the risk of investment, often considered in regulatory contexts.