ACCA AK Management Accounting

Question 1

Which of the following is an example of a 'fixed cost'?

Accepted Answer

Factory rent paid monthly regardless of output

Answer

Direct materials consumed in production

Answer

Sales commission paid as a percentage of revenue

Answer

Overtime wages paid when production exceeds a threshold

Question 2

Prime cost is calculated as:

Accepted Answer

Direct materials + Direct labour + Direct expenses

Answer

Direct materials + Direct labour + Production overhead

Answer

Total production cost less selling costs

Answer

Fixed costs + Variable costs

Question 3

Which cost classification is most relevant when deciding whether to shut down a product line?

Accepted Answer

Relevant (incremental) cost

Answer

Historical cost

Answer

Sunk cost

Answer

Absorbed overhead

Question 4

A production overhead absorption rate (OAR) is typically calculated as:

Accepted Answer

Budgeted overhead ÷ Budgeted activity

Answer

Actual overhead ÷ Actual activity

Answer

Actual overhead ÷ Budgeted activity

Answer

Budgeted overhead ÷ Actual activity

Question 5

If actual overhead incurred is £50,000 and absorbed overhead is £45,000, the result is:

Accepted Answer

Under-absorption of £5,000

Answer

Over-absorption of £5,000

Answer

A budget variance of £5,000

Answer

A volume variance of £5,000

Question 6

Which of the following statements about marginal costing is correct?

Accepted Answer

Only variable costs are included in the cost of a unit of product

Answer

Fixed production overheads are included in the unit cost of inventory

Answer

Marginal costing always produces higher profit than absorption costing

Answer

Marginal costing is required under IFRS for external reporting