Management Accounting (MA) Costing 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 (MA) Costing flashcards as text
A company uses activity-based costing (ABC). Which of the following is the best cost driver for the quality inspection activity?
Answer: Number of inspections performed
Under ABC, cost drivers should have a cause-and-effect relationship with the activity. The number of inspections performed directly drives quality inspection costs, making it the most appropriate cost driver.
A product has a variable cost of £8 per unit and a selling price of £12 per unit. Fixed costs are £20,000 per month. What is the breakeven point in units?
Answer: 5,000 units
Contribution per unit = £12 − £8 = £4. Breakeven point = Fixed costs ÷ Contribution per unit = £20,000 ÷ £4 = 5,000 units.
Which of the following describes a step cost?
Answer: A cost that remains fixed over a range of activity but jumps to a higher level once that range is exceeded
A step cost (or step-fixed cost) remains constant within a relevant range of activity but increases by a discrete amount when activity exceeds that range — for example, hiring an additional supervisor when production exceeds capacity.
The margin of safety represents:
Answer: The excess of budgeted or actual sales over the breakeven point
The margin of safety measures how far sales can fall before the organisation reaches its breakeven point. It is calculated as budgeted (or actual) sales minus breakeven sales, expressed in units, revenue, or as a percentage.
In standard costing, what does a favourable material usage variance indicate?
Answer: Less material was used than the standard allowed for the actual output
A favourable material usage variance means that actual quantity of material used was less than the standard quantity allowed for the actual level of output. This indicates efficient use of materials.
A company produces three products. Product X has a contribution per unit of £5 and requires 2 machine hours. Product Y has a contribution of £9 and requires 3 machine hours. Product Z has a contribution of £4 and requires 1 machine hour. If machine hours are the limiting factor, what is the optimal production priority?
Answer: Z, Y, X
Contribution per machine hour: X = £5/2 = £2.50, Y = £9/3 = £3.00, Z = £4/1 = £4.00. Ranking by contribution per limiting factor (highest first): Z (£4.00), Y (£3.00), X (£2.50). Produce Z first, then Y, then X to maximise profit.