Management Accounting Flashcards
6 cards from real ACCA AK practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Management Accounting flashcards as text
A cash budget differs from a profit budget primarily because:
Answer: It records transactions when cash is paid or received, not when earned or incurred
A cash budget records actual cash inflows and outflows; it excludes non-cash items like depreciation and includes capital receipts/payments excluded from the profit budget.
Which variance measures the difference between standard labour cost for actual output and the actual labour cost?
Answer: Total labour variance
The total labour variance = Standard labour cost for actual output − Actual labour cost. It combines both the rate and efficiency variances.
Over-absorption of overheads occurs when:
Answer: Absorbed overhead exceeds actual overhead
Over-absorption = absorbed overhead > actual overhead incurred. This arises when actual activity is higher than budgeted and/or actual overhead is lower than budgeted.
In process costing, 'normal loss' refers to:
Answer: Expected, unavoidable loss inherent in a production process
Normal loss is the expected, unavoidable shrinkage or waste in a process (e.g., evaporation, cutting waste). Its cost is absorbed into the cost of good output.
Which of the following is a purpose of budgeting?
Answer: To plan, coordinate and control business activities
Budgets serve multiple purposes: planning future activities, coordinating departments, communicating targets, motivating managers, and providing a basis for control through variance analysis.
The sales price variance measures the effect on revenue of:
Answer: Selling at a different price than the standard price
Sales price variance = (Actual price − Standard price) × Actual units sold. It isolates the impact of pricing decisions on revenue.