ACCA Management Accounting Techniques 5

Question 1

Which of the following is NOT typically a characteristic of a responsibility centre classified as a profit centre?

Accepted Answer

The manager controls long-term capital investment decisions

Answer

Capital investment decisions are the distinguishing feature of an investment centre, not a profit centre.

Question 2

A company uses kaizen costing. This means it focuses on:

Accepted Answer

Continuous, incremental cost reductions during the production phase

Answer

Kaizen costing involves setting ongoing cost reduction targets throughout the production life of a product, contrasting with target costing at the design stage.

Question 3

The labor efficiency variance is calculated as:

Accepted Answer

(Standard hours for actual output − Actual hours worked) × Standard rate

Answer

Labor efficiency variance = (Standard hours for actual output − Actual hours worked) × Standard labor rate per hour.

Question 4

Which of the following best describes a cost that is 'relevant' for a decision?

Accepted Answer

A future incremental cost that differs between alternatives

Answer

Relevant costs are future, incremental (differential) cash flows that change depending on which decision alternative is chosen; sunk and absorbed costs are irrelevant.

Question 5

In environmental management accounting, which approach assigns environmental costs directly to the products or processes that cause them?

Accepted Answer

Environmental activity-based costing

Answer

Environmental ABC traces environmental costs (waste disposal, emissions) to the specific products or processes that generate them using environmental cost drivers.

ACCA - Association of Chartered Certified Accountants Practice Test

ACCA - Association of Chartered Certified Accountants Practice Test

ACCA Management Accounting Techniques 5