Question Tag: Profit

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ICMA – Nov 2024 – L1 – Q1a – Marginal and Absorption Costing

Prepares profit or loss statements using both marginal costing and absorption costing methods.

Question

Profit or Loss Statement using Marginal and Absorption Costing
The following data has been extracted from the operating records of Agongon LTD for the last two quarters of the year to 31 December, 2023:

Quarter	3	4
Production units	8,400	10,200
Sales units	6,600	11,400

GH¢
Selling price per unit 120
Variable manufacturing cost per unit:

Direct material cost 24
Direct labour cost 18
Variable overheads 12

Fixed production overheads are budgeted at GH¢144,000 for a budgeted production of 9,600 units per quarter. These overheads are absorbed on a per-unit production basis.

Non-production overheads comprised:

Fixed administration expenses of GH¢48,000 per quarter
Selling and distribution expenses 10% of sales.

Required:
Prepare a statement of profit or loss for each quarter using:
a) The Marginal Costing technique
b) The Absorption Costing technique

Answer

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Tags: Absorption Costing, Financial Reporting, Marginal Costing, Profit, Variance
Level: Level 1

Topic: Marginal Costing and Absorption Costing
Series: Nov 2024

ATAX – May 2017 – L3 – Q6b – Corporate Tax Compliance and Reporting

Compute the Companies Income Tax liability for small businesses using the small business rate and explain the computations.

Question

You have been provided with the following information in respect of THREE small businesses:

You are required to:
i. Compute the Companies Income Tax liability for each of the companies for the relevant assessment year, using the small business rate. (3 Marks)
ii. Give reasons for your computations. (5 Marks)

Answer

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Tags: Companies Income Tax, Profit, Revenue, Small Business, Tax computation
Level: Level 3

Topic: Corporate Tax Compliance and Reporting

PM – Nov 2019 – L2 – Q3 – Pricing Decisions

Evaluate divisional and company profit, ROI, and RI for Rinc Nigeria Ltd.

Question

Rinc Nigeria Limited has two divisions, A and B. Division A specializes in the manufacture of a special part of a product while Division B completes the production and sells the final product. Division A also sells its components to third parties, and Division B can buy parts from external suppliers. Both divisions are profit centers.

The following are for the month of November:

Required:
a. Calculate the profit made by each division and the company as a whole for November. (10 Marks)
b. Calculate the ROI and RI of the divisions and the company. (5 Marks)
c. Discuss the advantages and disadvantages of ROI and RI as parameters for appraising divisional performance. (5 Marks)

Answer

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Tags: Divisional Performance, Profit, Residual Income, ROI, Transfer Pricing
Level: Level 2

Topic: Pricing Decisions
Series: NOV 2019

MI – Nov 2020 – L1 – SA – Q9 – Costing Techniques

Determine when the profit under marginal costing equals that of absorption costing.

Question

In which of the following will the profit of marginal costing equal absorption costing?

A. There is only closing stock

B. There is only opening stock

C. There is both opening and closing stock

D. There is no change in stock levels

E. There are lower fixed costs

Answer

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Tags: Absorption Costing, Inventory Levels, Marginal Costing, Profit
Level: Level 1

Topic: Costing Techniques
Series: NOV 2020

FA – Nov 2012 – L1 – SB – Q35 – Correction of Errors

Determine the effect of inventory understatement on profits for two years.

Question

In preparing a company’s financial statements for the year ended 30 September 2012, it was discovered that the company’s closing inventory was understated by N450,000. If the error remains uncorrected, the effect of this on the profits for 2012 and 2013 will be?

Answer

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Tags: Error Correction, Inventory, Profit
Level: Level 1

Topic: Correction of errors
Series: NOV 2012

FA – Nov 2012 – L1 – SA – Q18 – Financial Statements Preparation

Identifying the effect of transferring manufactured goods at market value.

Question

The effect of transferring manufactured goods at market value is that:

A. Profit is made on goods manufactured
B. Unsold stock of finished goods is carried at a value above cost
C. It encourages manufacturing of goods rather than being purchased
D. It encourages manufacturers to have good planning
E. Cost of goods produced can be reduced in order to increase sales

Answer

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Tags: Manufactured Goods, Profit, Stock
Level: Level 1

Topic: Financial Statements Preparation
Series: NOV 2012

FA – Nov 2012 – L1 – SA – Q16 – Partnership Accounts

Determining when interest on partners’ capital is paid.

Question

When duties to be carried out by each partner are of equal value but the capital contributed is unequal, it is:

A. Unreasonable to pay interest on the partners’ capital out of profit
B. Reasonable to pay interest on the partners’ current account out of profit
C. Reasonable to pay interest on the partners’ loan account out of profit
D. Unreasonable to pay interest on the partners’ current account out of profit
E. Reasonable to pay interest on the partners’ capital out of partnership profit

Answer

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Tags: Capital, Interest, Partnership, Profit
Level: Level 1

Topic: Partnership Accounts (Including Profit Sharing, Capital and Current Accounts)
Series: NOV 2012

FA – Nov 2012 – L1 – SA – Q15 – Financial Statements Preparation

Determining the outcome when opening capital is higher than closing capital.

Question

If the opening capital is higher than the closing capital, the business has made:

A. Profit during the year
B. Profit during the year before changes in equity
C. Loss during the year after adjustment for non-current assets
D. Loss during the year before adjustment for drawings
E. Profit during the year without adjustment for drawings

Answer

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Tags: Capital, Financial Statements, Loss, Profit
Level: Level 1

Topic: Financial Statements Preparation
Series: NOV 2012

FA – Nov 2012 – L1 – SA – Q1 – Elements of Financial Statements

Determining which of the listed options is not part of retained earnings.

Question

Which of the following is NOT part of retained earnings?

A. Revenue reserve
B. Accumulated profits
C. Profits on exceptional activities
D. Undistributed profits
E. Unappropriated profits

Answer

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Tags: Financial Statements, Profit, Reserves, Retained Earnings
Level: Level 1

Topic: Elements of Financial Statements
Series: NOV 2012

QTB – May 2015 – L1 – SB – Q6 – Operations Research

This question involves calculating the change in revenue, total revenue, total cost, and total profit for a manufacturer based on given marginal cost and marginal revenue functions.

Question

A manufacturer determines that the firm’s Marginal Cost (MC) and Marginal Revenue (MR) functions are:

MR = R′(x)=100 + 0.1x

You are required to find the:

a. Change in revenue that results when the sales level increases from 20 to 30 units. (5 Marks)
b. Revenue resulting from the sale of 30 units. (5 Marks)
c. Cost of producing 30 units if the fixed cost (at $x = 0$ ) is N400. (5 Marks)
d. Total profit when 30 units of the product are sold. (5 Marks)

Answer

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Tags: Fixed Cost, Marginal Cost, Marginal Revenue, Profit, Total Revenue
Level: Level 1

Topic: Operations Research
Series: MAY 2015

ICMA – Nov 2024 – L1 – Q1a – Marginal and Absorption Costing

Prepares profit or loss statements using both marginal costing and absorption costing methods.

Question

Quarter	3	4
Production units	8,400	10,200
Sales units	6,600	11,400

GH¢
Selling price per unit 120
Variable manufacturing cost per unit:

Direct material cost 24
Direct labour cost 18
Variable overheads 12

Fixed production overheads are budgeted at GH¢144,000 for a budgeted production of 9,600 units per quarter. These overheads are absorbed on a per-unit production basis.

Non-production overheads comprised:

Fixed administration expenses of GH¢48,000 per quarter
Selling and distribution expenses 10% of sales.

Required:
Prepare a statement of profit or loss for each quarter using:
a) The Marginal Costing technique
b) The Absorption Costing technique

Answer

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Tags: Absorption Costing, Financial Reporting, Marginal Costing, Profit, Variance
Level: Level 1

Topic: Marginal Costing and Absorption Costing
Series: Nov 2024

ATAX – May 2017 – L3 – Q6b – Corporate Tax Compliance and Reporting

Compute the Companies Income Tax liability for small businesses using the small business rate and explain the computations.

Question

You have been provided with the following information in respect of THREE small businesses:

Answer

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Tags: Companies Income Tax, Profit, Revenue, Small Business, Tax computation
Level: Level 3

Topic: Corporate Tax Compliance and Reporting

PM – Nov 2019 – L2 – Q3 – Pricing Decisions

Evaluate divisional and company profit, ROI, and RI for Rinc Nigeria Ltd.

Question

The following are for the month of November:

Answer

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Tags: Divisional Performance, Profit, Residual Income, ROI, Transfer Pricing
Level: Level 2

Topic: Pricing Decisions
Series: NOV 2019

MI – Nov 2020 – L1 – SA – Q9 – Costing Techniques

Determine when the profit under marginal costing equals that of absorption costing.

Question

In which of the following will the profit of marginal costing equal absorption costing?

A. There is only closing stock

B. There is only opening stock

C. There is both opening and closing stock

D. There is no change in stock levels

E. There are lower fixed costs

Answer

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Tags: Absorption Costing, Inventory Levels, Marginal Costing, Profit
Level: Level 1

Topic: Costing Techniques
Series: NOV 2020

FA – Nov 2012 – L1 – SB – Q35 – Correction of Errors

Determine the effect of inventory understatement on profits for two years.

Question

Answer

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Tags: Error Correction, Inventory, Profit
Level: Level 1

Topic: Correction of errors
Series: NOV 2012

FA – Nov 2012 – L1 – SA – Q18 – Financial Statements Preparation

Identifying the effect of transferring manufactured goods at market value.

Question

The effect of transferring manufactured goods at market value is that:

Answer

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Tags: Manufactured Goods, Profit, Stock
Level: Level 1

Topic: Financial Statements Preparation
Series: NOV 2012

FA – Nov 2012 – L1 – SA – Q16 – Partnership Accounts

Determining when interest on partners’ capital is paid.

Question

When duties to be carried out by each partner are of equal value but the capital contributed is unequal, it is:

Answer

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Tags: Capital, Interest, Partnership, Profit
Level: Level 1

Topic: Partnership Accounts (Including Profit Sharing, Capital and Current Accounts)
Series: NOV 2012

FA – Nov 2012 – L1 – SA – Q15 – Financial Statements Preparation

Determining the outcome when opening capital is higher than closing capital.

Question

If the opening capital is higher than the closing capital, the business has made:

Answer

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Tags: Capital, Financial Statements, Loss, Profit
Level: Level 1

Topic: Financial Statements Preparation
Series: NOV 2012

FA – Nov 2012 – L1 – SA – Q1 – Elements of Financial Statements

Determining which of the listed options is not part of retained earnings.

Question

Which of the following is NOT part of retained earnings?

A. Revenue reserve
B. Accumulated profits
C. Profits on exceptional activities
D. Undistributed profits
E. Unappropriated profits

Answer

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Tags: Financial Statements, Profit, Reserves, Retained Earnings
Level: Level 1

Topic: Elements of Financial Statements
Series: NOV 2012

QTB – May 2015 – L1 – SB – Q6 – Operations Research

This question involves calculating the change in revenue, total revenue, total cost, and total profit for a manufacturer based on given marginal cost and marginal revenue functions.

Question

A manufacturer determines that the firm’s Marginal Cost (MC) and Marginal Revenue (MR) functions are:

MR = R′(x)=100 + 0.1x

You are required to find the:

Answer

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Tags: Fixed Cost, Marginal Cost, Marginal Revenue, Profit, Total Revenue
Level: Level 1

Topic: Operations Research
Series: MAY 2015

Question Tag: Profit

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ICMA – Nov 2024 – L1 – Q1a – Marginal and Absorption Costing

Prepares profit or loss statements using both marginal costing and absorption costing methods.

ATAX – May 2017 – L3 – Q6b – Corporate Tax Compliance and Reporting

Compute the Companies Income Tax liability for small businesses using the small business rate and explain the computations.

PM – Nov 2019 – L2 – Q3 – Pricing Decisions

Evaluate divisional and company profit, ROI, and RI for Rinc Nigeria Ltd.

MI – Nov 2020 – L1 – SA – Q9 – Costing Techniques

Determine when the profit under marginal costing equals that of absorption costing.

FA – Nov 2012 – L1 – SB – Q35 – Correction of Errors

Determine the effect of inventory understatement on profits for two years.

FA – Nov 2012 – L1 – SA – Q18 – Financial Statements Preparation

Identifying the effect of transferring manufactured goods at market value.

FA – Nov 2012 – L1 – SA – Q16 – Partnership Accounts

Determining when interest on partners’ capital is paid.

FA – Nov 2012 – L1 – SA – Q15 – Financial Statements Preparation

Determining the outcome when opening capital is higher than closing capital.

FA – Nov 2012 – L1 – SA – Q1 – Elements of Financial Statements

Determining which of the listed options is not part of retained earnings.

QTB – May 2015 – L1 – SB – Q6 – Operations Research

This question involves calculating the change in revenue, total revenue, total cost, and total profit for a manufacturer based on given marginal cost and marginal revenue functions.

ICMA – Nov 2024 – L1 – Q1a – Marginal and Absorption Costing

Prepares profit or loss statements using both marginal costing and absorption costing methods.

ATAX – May 2017 – L3 – Q6b – Corporate Tax Compliance and Reporting

Compute the Companies Income Tax liability for small businesses using the small business rate and explain the computations.

PM – Nov 2019 – L2 – Q3 – Pricing Decisions

Evaluate divisional and company profit, ROI, and RI for Rinc Nigeria Ltd.

MI – Nov 2020 – L1 – SA – Q9 – Costing Techniques

Determine when the profit under marginal costing equals that of absorption costing.

FA – Nov 2012 – L1 – SB – Q35 – Correction of Errors

Determine the effect of inventory understatement on profits for two years.

FA – Nov 2012 – L1 – SA – Q18 – Financial Statements Preparation

Identifying the effect of transferring manufactured goods at market value.

FA – Nov 2012 – L1 – SA – Q16 – Partnership Accounts

Determining when interest on partners’ capital is paid.

FA – Nov 2012 – L1 – SA – Q15 – Financial Statements Preparation

Determining the outcome when opening capital is higher than closing capital.

FA – Nov 2012 – L1 – SA – Q1 – Elements of Financial Statements

Determining which of the listed options is not part of retained earnings.

QTB – May 2015 – L1 – SB – Q6 – Operations Research

This question involves calculating the change in revenue, total revenue, total cost, and total profit for a manufacturer based on given marginal cost and marginal revenue functions.

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