ACCA Management Accounting 3

Question 1

A company manufactures two products, X and Y, using the same machine. Machine hours are limited to 10,000 hours per period. Product X contributes $8 per machine hour and product Y contributes $12 per machine hour. Which product should be prioritized?

Accepted Answer

Product Y, because it has a higher contribution per limiting factor unit

Answer

When a resource is scarce, products should be ranked by contribution per unit of limiting factor; Product Y at $12/hour ranks higher.

Question 2

Which of the following statements about throughput accounting is CORRECT?

Accepted Answer

It treats all costs except direct materials as period costs

Answer

Throughput accounting treats only direct material as a truly variable cost; all other costs (including labor) are considered fixed period costs.

Question 3

What does a positive sales volume variance indicate?

Accepted Answer

Actual units sold exceeded budgeted units sold

Answer

A favorable sales volume variance means the company sold more units than budgeted, resulting in higher total contribution or profit than planned.

Question 4

In target costing, the target cost is calculated as:

Accepted Answer

Market price minus desired profit margin

Answer

Target cost = target selling price − desired profit margin, so cost reduction efforts focus on achieving that target.

Question 5

Which costing method is most appropriate for a company that produces large, unique items such as ships or custom machinery?

Accepted Answer

Job costing

Answer

Job costing is used when each unit or contract is unique and costs need to be tracked individually for each specific job.

ACCA - Association of Chartered Certified Accountants Practice Test

ACCA - Association of Chartered Certified Accountants Practice Test

ACCA Management Accounting 3