ACCA AS Performance Management (PM) 2

Question 1

Which of the following best describes throughput accounting's definition of 'throughput contribution'?

Accepted Answer

Sales revenue minus direct material costs only

Answer

Sales revenue minus all variable costs

Answer

Sales revenue minus all manufacturing costs

Answer

Sales revenue minus direct labour and material costs

Question 2

A learning curve of 80% means that each time cumulative output doubles, the cumulative average time per unit:

Accepted Answer

Decreases to 80% of the previous cumulative average

Answer

Increases by 80%

Answer

Decreases by 80%

Answer

Remains at 80% of the original time for the first unit

Question 3

Which of the following variances would be the responsibility of the purchasing manager?

Accepted Answer

Material price variance

Answer

Material usage variance

Answer

Labour efficiency variance

Answer

Sales volume variance

Question 4

What is the main limitation of Return on Investment (ROI) as a divisional performance measure?

Accepted Answer

It may lead managers to reject projects that exceed the company's cost of capital but reduce divisional ROI

Answer

It cannot be compared across divisions of different sizes

Answer

It ignores revenue and focuses only on costs

Answer

It requires the use of replacement cost for asset valuation

Question 5

In activity-based costing (ABC), what is a cost driver?

Accepted Answer

A factor that causes the cost of an activity to change

Answer

The total cost allocated to a product

Answer

The overhead absorption rate for a department

Answer

The budget holder responsible for controlling costs

Question 6

A company uses target costing. The target selling price is £50, and the required profit margin is 20% of selling price. What is the target cost?

Accepted Answer

£40

Answer

£10

Answer

£30

Answer

£45