ACCA Management Accounting Techniques 3

Question 1

Which of the following is an example of a stepped fixed cost?

Accepted Answer

Warehouse rental that doubles when a second warehouse is required

Answer

Stepped fixed costs remain constant within a range but increase in steps when activity exceeds a certain level, such as needing an additional warehouse.

Question 2

In variance analysis, the sales volume variance measures the difference between:

Accepted Answer

Budgeted and actual units sold, valued at standard profit or contribution

Answer

The sales volume variance = (Actual sales volume − Budgeted sales volume) × Standard profit per unit (absorption) or standard contribution (marginal).

Question 3

A budget that is updated continuously by adding a new period as each period ends is called a:

Accepted Answer

Rolling budget

Answer

A rolling (or continuous) budget always covers a set period ahead by dropping the most recent period completed and adding a new future period.

Question 4

The transfer price that maximizes overall group profit when there is no external market for the intermediate product is:

Accepted Answer

Marginal cost of the supplying division

Answer

When no external market exists, transferring at marginal (variable) cost ensures the buying division makes decisions in the group's best interest.

Question 5

Target costing sets the product cost as:

Accepted Answer

Target selling price minus desired profit margin

Answer

Target cost = Target selling price − Required profit, so the company must design or re-engineer the product to meet this cost.

ACCA - Association of Chartered Certified Accountants Practice Test

ACCA - Association of Chartered Certified Accountants Practice Test

ACCA Management Accounting Techniques 3