ACA Management Information 2

Question 1

A standard cost is best described as:

Accepted Answer

The predetermined unit cost based on expected usage and prices

Answer

A standard cost is a carefully predetermined unit cost based on expected material quantities, labour times, and overhead rates under efficient operating conditions.

Question 2

The adverse sales volume variance indicates:

Accepted Answer

Actual sales were below budgeted sales in volume terms

Answer

Sales volume variance = (actual volume − budgeted volume) × standard profit per unit. An adverse variance means fewer units were sold than budgeted, reducing profit.

Question 3

In throughput accounting, the key constraint is managed using the ratio:

Accepted Answer

Throughput per unit / time on bottleneck resource

Answer

Throughput accounting ranks products by throughput (sales revenue minus direct materials) per unit of the bottleneck resource, maximising return from the constraint.

Question 4

Life cycle costing considers:

Accepted Answer

All costs from design through production, sale, and after-sale support to disposal

Answer

Life cycle costing accumulates all costs associated with a product across its entire life — from development and launch through to decommissioning — to understand true profitability.

Question 5

Which performance measure is used in a profit centre?

Accepted Answer

Profit (contribution and net profit)

Answer

A profit centre manager is responsible for both revenues and costs, and is therefore assessed on profit (or contribution) rather than just costs or return on assets.

ACA ICAEW Practice Test

ACA ICAEW Practice Test

ACA Management Information 2