ACCA Management Accounting Techniques 2

Question 1

A company has fixed costs of $120,000 and a contribution margin ratio of 40%. What is the breakeven point in sales revenue?

Accepted Answer

$300,000

Answer

Breakeven sales = Fixed costs ÷ Contribution margin ratio = $120,000 ÷ 0.40 = $300,000.

Question 2

Which costing method treats fixed production overheads as period costs rather than product costs?

Accepted Answer

Marginal costing

Answer

Marginal costing charges fixed production overheads entirely to the period in which they are incurred, not to products.

Question 3

In a standard costing system, a favorable material usage variance means:

Accepted Answer

Less material was used than the standard allowed

Answer

A favorable material usage variance occurs when actual material consumed is less than the standard quantity allowed for actual output.

Question 4

A company uses throughput accounting. Which cost is treated as a 'totally variable cost'?

Accepted Answer

Direct materials

Answer

In throughput accounting, only direct materials are considered truly variable; labor and overheads are treated as fixed operating expenses.

Question 5

What does the term 'life cycle costing' refer to in management accounting?

Accepted Answer

Tracking costs across all stages from design to disposal

Answer

Life cycle costing accumulates and manages costs across all phases: design, development, production, marketing, and disposal.

ACCA - Association of Chartered Certified Accountants Practice Test