ACCA AK Management Accounting 2

Question 1

Which budgeting approach requires managers to justify all expenditure from a zero base each period?

Accepted Answer

Zero-based budgeting

Answer

Zero-based budgeting (ZBB) starts from scratch each period — every cost must be justified afresh rather than simply adding a percentage to last year's budget.

Question 2

A flexible budget is one that:

Accepted Answer

Is adjusted to reflect the actual level of activity achieved

Answer

A flexible budget is restated for the actual activity level achieved, allowing a fair comparison with actual costs and meaningful variance analysis.

Question 3

Which of the following is a direct cost?

Accepted Answer

Raw materials used in a product

Answer

A direct cost can be directly traced to a specific cost unit. Raw materials used are directly attributable to a product, unlike overheads which are indirect.

Question 4

The difference between budgeted profit and actual profit explained by volume sold is the:

Accepted Answer

Volume variance

Answer

The sales volume variance measures the impact on profit of selling more or fewer units than budgeted. It uses the standard profit margin per unit.

Question 5

Contribution is calculated as:

Accepted Answer

Sales revenue − Variable costs

Answer

Contribution = Sales revenue − Variable costs. It represents the amount available to cover fixed costs and generate profit.

ACCA Applied Knowledge Practice Test

ACCA Applied Knowledge Practice Test

ACCA AK Management Accounting 2