Question

AQA A Level Business Year 1 (AS) Multiple and under what ISION MAKING TO IMPROVE FINANCIAL PERFORMANCE MCG TEST 2 which one of these would result in a favourable budget variance? A Budget cost E18Actual cost €16k B Actual gross profit E13k Budget gross profit £16k C Budget revenue £125k: Actual revenue E115k D Actual sales E40k: Budget sales £42k 0000 1 mark Last month fixed costs and contribution were £50,000 and £75,000 respectively. What is the profit this month if both increase by 10%? A £5,000 B £55,000 C £27,500 D £32,500 1 mark 06 What is meant by "sale and leaseback"? A Buying a fixed asset and leasing it to the supplier B Selling a fixed asset and then leasing it from the new owner C Buying stocks and then leasing them to a wholesaler D Selling stocks and then leasing them from a distributor OOOO 1 mark 07 A business Improves its gross profit margin from 23% to 26%. What was gross profit if revenues of £2million were made at the improved margin? A £60,000 B £260,000 C £460,000 D £520,000 OOOO 1 mark www.tutor2u.net Copyright Tutoru Limited 2016 All Rights Reserved

Answer 1

4.

If actual cost is less than budgeted cost, then budgeted variance is favorable one.

For option A:

Budgeted variance = Actual cost – Budgeted cost = £ 15 K - £ 18 K = - £ 3 K i.e. Favorable variance

Hence option “A. Budgeted cost £ 18 K; Actual cost £ 15 K” is correct answer.

2.

New profit = New contribution – New fixed cost

                = (£ 75,000 x 1.1) – (£ 50,000 x 1.1)

                  = £ 82,500 - £ 55,000

                  = £ 27,500

Hence option “C. £ 27,500” is correct answer.

3.

Sales and lease back or leaseback is a financial transaction which allows a company to sell the fixed asset or property and leases it back for long term from the second owner. So leaseback transaction permits the seller to use the asset without owing it.

Hence option “B. Selling a fixed asset and then leasing it from the new owner” is correct answer.

4.

Gross profit = Revenue x 0.26 = £ 2,000,000 x 0.26 = £ 520,000

Hence option “D. £ 520,000“ is correct answer.