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1. Variable Cost per unit = ($90,000 + $6,000) / 6,000 = $16.
2. Contribution per unit = $40 - $16 = $24.
3. Total Fixed Costs = $54,000 + $21,000 = $75,000.
4. Required Units = (Fixed Costs + Target Profit) / Contribution = ($75,000 + $45,000) / $24 = 5,000 units.
Under the UK Partnership Act 1890 (often used as the basis for these exams), if no agreement exists: no interest on capital, no salaries, no interest on drawings, and interest on partner loans is usually 5% (not 10%). Thus, only 3 and 4 are correct.
Option C is correct.
Correct depreciation = $530,000 × 25% = $132,500
Already charged = $530,000 × 10% = $53,000
Additional needed = $132,500 − $53,000 = $79,500
Entry: Debit Statement of profit or loss $79,500 | Credit Provision for depreciation $79,500
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