Manufacturer business math: mixed quiz

Twelve questions across unit costing, absorption costing, capacity, yield, machine hour rate, depreciation, OEM pricing, make-or-buy and operating leverage.

12 questions drawn from all the manufacturer business-math topics, from basic to advanced. Each answer links back to its topic page if you want to revise.

How numbers are rounded on these pages. Calculations are done at full precision and rounded only at the end, half up. Rupee amounts are rounded to the nearest rupee unless shown with paise, in which case to the nearest paisa. Percentages are shown to two decimal places; payback periods in years, and ratios such as degree of operating leverage, to two decimal places. Quantities you must start, buy or sell to reach a target are rounded up to the next whole unit or kg. Depreciation uses textbook straight line and written down value methods, not the rates or lives set by tax or company law. All examples and quiz questions are Hypothetical: they show the method, not real prices or rates.

Mixed quiz

Pick an answer to see at once whether it is right, with a short explanation. Each question takes one try; your score appears at the end. No answers are sent anywhere. (Without JavaScript, open “Show answer” under each question.)

Unit costing · IntermediateFixed costs are ₹4,80,000 a month and output is 12,000 units. Variable cost is ₹55 a unit. Full cost per unit?
a₹40b₹55c₹95d₹4,80,055
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Answer: (c) ₹95
₹4,80,000 ÷ 12,000 = ₹40; ₹40 + ₹55 = ₹95.
Why the other options are wrong:
- (a) That is the fixed part only.
- (b) That is the variable part only.
- (d) That adds the whole month's fixed cost to one unit.
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Absorption vs marginal · IntermediateYou made 10,000 units and sold 8,000 (no opening stock). Fixed overhead per unit is ₹25. Which profit is higher, and by how much?
aMarginal, by ₹50,000bAbsorption, by ₹2,50,000cAbsorption, by ₹2,00,000dAbsorption, by ₹50,000
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Answer: (d) Absorption, by ₹50,000
Stock rose by 2,000 units; 2,000 × ₹25 = ₹50,000, in favour of absorption.
Why the other options are wrong:
- (a) With stock rising, absorption carries fixed cost into stock, so absorption profit is higher.
- (b) That uses all units made, not the change in stock.
- (c) That uses units sold.
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Capacity and volume · AdvancedYou have spare capacity. An OEM offers 5,000 extra units at ₹70. Variable cost is ₹58 and full cost ₹98 a unit; fixed costs will not change. Effect on profit?
aLoss of ₹1,40,000bProfit up ₹3,50,000cProfit up ₹60,000dNo change
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Answer: (c) Profit up ₹60,000
5,000 × (₹70 − ₹58) = ₹60,000 more profit.
Why the other options are wrong:
- (a) That uses full cost; fixed costs are paid anyway.
- (b) That is the revenue, not the profit.
- (d) Each unit adds ₹12 of contribution.
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Yield and rejection · IntermediateYour process yield is 80%. You need 4,000 good units. How many must you start?
a4,800 unitsb3,200 unitsc5,000 unitsd4,020 units
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Answer: (c) 5,000 units
4,000 ÷ 0.80 = 5,000 units.
Why the other options are wrong:
- (a) Adding 20% is not enough: 20% of 4,800 is lost, leaving 3,840.
- (b) That is the good output from 4,000 starts.
- (d) Not 4,000 ÷ 80%.
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Machine hour rate · IntermediateStanding charges are ₹4,50,000 a year over 3,000 productive hours. The motor is 20 kW and power costs ₹8 a kWh. Machine hour rate?
a₹150b₹160c₹158d₹310
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Answer: (d) ₹310
₹4,50,000 ÷ 3,000 = ₹150; power 20 × ₹8 = ₹160; rate ₹310 an hour.
Why the other options are wrong:
- (a) That leaves out power.
- (b) That is power only.
- (c) That adds ₹8, not 20 kW × ₹8.
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Depreciation and payback · IntermediateWDV at 25% on a machine costing ₹4,00,000. Depreciation in year 2?
a₹1,00,000b₹75,000c₹2,25,000d₹56,250
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Answer: (b) ₹75,000
Year 1: ₹1,00,000, leaving ₹3,00,000. Year 2: ₹3,00,000 × 25% = ₹75,000.
Why the other options are wrong:
- (a) That is year 1; year 2 is charged on the lower book value.
- (c) That is the book value at the end of year 2.
- (d) That is year 3.
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Pricing to an OEM · IntermediateA ₹1,000 part has a 3% annual price reduction, each year applied to the previous year's price. Price after three reductions?
a₹910.00b₹940.90c₹912.67d₹970.00
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Answer: (c) ₹912.67
₹1,000 × 0.97³ = ₹912.67.
Why the other options are wrong:
- (a) That takes 9% off once; reductions compound.
- (b) That is after two reductions.
- (d) That is after one reduction.
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Make or buy · Intermediate12,000 parts a year. Making: ₹50 variable a part plus ₹1,20,000 avoidable fixed cost. Buying: ₹58 a part. Which is cheaper, by how much a year?
aMake, by ₹96,000bBuy, by ₹24,000cBuy, by ₹1,20,000dMake, by ₹24,000
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Answer: (b) Buy, by ₹24,000
Make = 12,000 × ₹50 + ₹1,20,000 = ₹7,20,000; buy = 12,000 × ₹58 = ₹6,96,000.
Why the other options are wrong:
- (a) That ignores the avoidable fixed cost.
- (c) That ignores the variable cost difference.
- (d) Make costs ₹7,20,000; buy ₹6,96,000.
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Operating leverage · IntermediateSales ₹80,00,000, variable costs ₹48,00,000, fixed costs ₹24,00,000. DOL?
a3.33b1.33c4.00d10.00
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Answer: (c) 4.00
Contribution ₹32 lakh; profit ₹8 lakh; DOL = 4.00.
Why the other options are wrong:
- (a) That is sales ÷ fixed costs.
- (b) That divides contribution by fixed costs.
- (d) That divides sales by profit.
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Yield and rejection · AdvancedA batch of 1,000 units costs ₹2,40,000 to make. 4% are scrapped with no value. Cost per good unit?
a₹240b₹250c₹249.60d₹230.40
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Answer: (b) ₹250
Good units = 960. ₹2,40,000 ÷ 960 = ₹250.
Why the other options are wrong:
- (a) That ignores the scrap.
- (c) That adds 4% to ₹240; the right way is to divide by the 96% that are good.
- (d) That reduces the cost; scrap raises it.
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Pricing to an OEM · AdvancedSame part (price ₹400, cost ₹360, a 10% margin). After the 5% cut, what cost keeps the margin at 10%?
a₹340b₹342c₹360d₹418
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Answer: (b) ₹342
₹380 × (1 − 10%) = ₹342.
Why the other options are wrong:
- (a) That keeps the rupee profit, which is a higher margin % on a lower price.
- (c) That leaves cost unchanged.
- (d) That adds 10% to the new price.
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Absorption vs marginal · AdvancedThe absorption rate is ₹30 a unit (budget 20,000 units). Actual output was 17,000 units and actual fixed overheads ₹6,10,000. What happened?
aUnder-absorbed by ₹1,00,000bOver-absorbed by ₹1,00,000cUnder-absorbed by ₹10,000dUnder-absorbed by ₹90,000
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Answer: (a) Under-absorbed by ₹1,00,000
Absorbed = 17,000 × ₹30 = ₹5,10,000. ₹6,10,000 − ₹5,10,000 = ₹1,00,000 under-absorbed.
Why the other options are wrong:
- (b) Absorbed (₹5,10,000) is less than actual, so it is under-absorbed.
- (c) That compares only budgeted and actual overheads.
- (d) That compares with the budget of ₹6,00,000 instead of actual ₹6,10,000.
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