Management Accounting Flashcards
6 cards from real ACCA AK practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Management Accounting flashcards as text
Which of the following is a characteristic of a 'profit centre'?
Answer: It is accountable for both revenues and costs
A profit centre is responsible for both revenues and costs, so its performance is measured by the profit it generates, unlike a cost centre which tracks costs only.
Which inventory valuation method charges the most recent purchase prices to cost of sales during a period of rising prices?
Answer: LIFO (Last In First Out)
LIFO issues the most recently purchased (and therefore most expensive in a rising price environment) inventory first, resulting in higher COGS and lower closing inventory.
Which of the following is included in the cost of conversion under IAS 2?
Answer: Direct labour and production overheads
IAS 2 defines cost of conversion as direct labour, direct expenses and a systematic allocation of fixed and variable production overheads.
A limiting factor (key factor) is:
Answer: A resource in short supply that restricts output
A limiting factor is a scarce resource (e.g., machine hours, labour hours, materials) that constrains the organisation's ability to maximise its objectives.
When there is a single limiting factor, the optimal production plan ranks products by:
Answer: Highest contribution per unit of the limiting factor
With one limiting factor, products are ranked by contribution per unit of the limiting factor (e.g., contribution per machine hour) to maximise total contribution.
Which of the following describes 'absorption costing'?
Answer: Both fixed and variable production costs are included in unit cost
Absorption costing includes both variable and fixed production overhead in the cost per unit. This is required for external reporting under IAS 2.