ACCA AK Management Accounting (MA) Costing 2

Question 1

A company uses activity-based costing (ABC). Which of the following is the best cost driver for the quality inspection activity?

Accepted Answer

Number of inspections performed

Answer

Number of machine hours

Answer

Number of units sold

Answer

Square metres of warehouse space

Question 2

A product has a variable cost of £8 per unit and a selling price of £12 per unit. Fixed costs are £20,000 per month. What is the breakeven point in units?

Accepted Answer

5,000 units

Answer

2,500 units

Answer

1,667 units

Answer

4,000 units

Question 3

Which of the following describes a step cost?

Accepted Answer

A cost that remains fixed over a range of activity but jumps to a higher level once that range is exceeded

Answer

A cost that increases in direct proportion to output

Answer

A cost that decreases as output increases

Answer

A cost that fluctuates randomly with no pattern

Question 4

The margin of safety represents:

Accepted Answer

The excess of budgeted or actual sales over the breakeven point

Answer

The difference between total revenue and total variable costs

Answer

The total contribution earned from all products

Answer

The difference between fixed costs and variable costs

Question 5

In standard costing, what does a favourable material usage variance indicate?

Accepted Answer

Less material was used than the standard allowed for the actual output

Answer

More material was used than the standard allowed

Answer

Material was purchased at a price below standard

Answer

Actual production was less than budgeted production

Question 6

A company produces three products. Product X has a contribution per unit of £5 and requires 2 machine hours. Product Y has a contribution of £9 and requires 3 machine hours. Product Z has a contribution of £4 and requires 1 machine hour. If machine hours are the limiting factor, what is the optimal production priority?

Accepted Answer

Z, Y, X

Answer

X, Y, Z

Answer

Y, X, Z

Answer

Z, X, Y