ACCA - Association of Chartered Certified Accountants Management Accounting Techniques Questions and Answers

Question 1

A company is developing a new product in a highly competitive market.
The marketing department has determined a likely selling price of $150 per unit.
The company requires a profit margin of 30% on the selling price.
What management accounting technique is being described, and what is the target cost per unit?

Accepted Answer

Target Costing; $105

Answer

Lifecycle Costing; $105

Answer

Activity-Based Costing; $115.50

Answer

Throughput Accounting; $150

Question 2

Which of the following statements best describes a key principle of Throughput Accounting?

Accepted Answer

In the short term, only direct material costs are considered truly variable.

Answer

All factory costs, including direct labor, are treated as variable costs in the short term.

Answer

The primary goal is to maximize the contribution per unit for all products.

Answer

Inventory is considered an asset, and increasing it can improve profitability.

Question 3

A manufacturing company is reviewing its overhead allocation. It produces a standard, high-volume product and a customized, low-volume product. The customized product requires frequent machine setups and significant engineering support, which are currently absorbed into a single, volume-based overhead rate. Which management accounting technique would provide a more accurate product cost for the customized product?

Accepted Answer

Activity-Based Costing (ABC)

Answer

Lifecycle Costing

Answer

Relevant Costing

Answer

Target Costing

Question 4

A company is evaluating a special one-time contract. In considering the costs associated with the contract, which of the following would be considered a 'relevant cost'?

Accepted Answer

The future cost of additional materials that need to be purchased specifically for this contract.

Answer

Depreciation on machinery that will be used for the contract.

Answer

The cost of raw materials already in inventory that have no alternative use and would otherwise be scrapped.

Answer

The salary of the factory manager who will oversee the production.

Question 5

The management of a technology company wants to assess the total profitability of its new tablet device, from the initial research and development phase through to the costs of disposal and environmental cleanup at the end of its useful life. Which management accounting technique is most appropriate for this purpose?

Accepted Answer

Lifecycle Costing

Answer

Target Costing

Answer

Throughput Accounting

Answer

Activity-Based Costing

Question 6

Which of the following techniques, when applied to environmental management accounting, focuses on the principle that 'what comes in must go out or be stored' by reconciling material inflows with outflows to highlight waste?

Accepted Answer

Input/Output Analysis

Answer

Activity-Based Costing

Answer

Lifecycle Costing

Answer

Flow Cost Accounting