ACCA Management Accounting 2

Question 1

A company uses activity-based costing (ABC). Which of the following is the BEST description of a cost driver?

Accepted Answer

A factor that causes changes in the cost of an activity

Answer

A cost driver is any factor that causes a change in the cost of an activity, such as number of setups or machine hours.

Question 2

Under marginal costing, which costs are included in the valuation of closing inventory?

Accepted Answer

Variable production costs only

Answer

Under marginal costing, only variable production costs are included in inventory valuation; fixed costs are treated as period costs.

Question 3

What is the main purpose of a flexible budget?

Accepted Answer

To compare actual costs against costs expected at the actual level of activity

Answer

A flexible budget adjusts budgeted figures to the actual level of activity, enabling meaningful variance analysis.

Question 4

A product has a selling price of $50, variable cost of $30, and total fixed costs of $40,000. What is the breakeven point in units?

Accepted Answer

2,000 units

Answer

Contribution per unit = $50 − $30 = $20; breakeven = $40,000 ÷ $20 = 2,000 units.

Question 5

In a standard costing system, a favorable material price variance occurs when:

Accepted Answer

The actual price paid is less than the standard price

Answer

A favorable material price variance arises when the actual price paid per unit of material is less than the standard price.

ACCA - Association of Chartered Certified Accountants Practice Test