Management Accounting Techniques Flashcards
7 cards from real ACCA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Management Accounting Techniques flashcards as text
Which of the following is NOT typically a characteristic of a responsibility centre classified as a profit centre?
Answer: The manager controls long-term capital investment decisions
Capital investment decisions are the distinguishing feature of an investment centre, not a profit centre.
A company uses kaizen costing. This means it focuses on:
Answer: Continuous, incremental cost reductions during the production phase
Kaizen costing involves setting ongoing cost reduction targets throughout the production life of a product, contrasting with target costing at the design stage.
The labor efficiency variance is calculated as:
Answer: (Standard hours for actual output − Actual hours worked) × Standard rate
Labor efficiency variance = (Standard hours for actual output − Actual hours worked) × Standard labor rate per hour.
Which of the following best describes a cost that is 'relevant' for a decision?
Answer: A future incremental cost that differs between alternatives
Relevant costs are future, incremental (differential) cash flows that change depending on which decision alternative is chosen; sunk and absorbed costs are irrelevant.
In environmental management accounting, which approach assigns environmental costs directly to the products or processes that cause them?
Answer: Environmental activity-based costing
Environmental ABC traces environmental costs (waste disposal, emissions) to the specific products or processes that generate them using environmental cost drivers.
A company is evaluating a make-or-buy decision. The relevant cost to make the component internally is:
Answer: Variable production cost plus any avoidable fixed costs
Only future incremental costs that can be avoided if the component is bought externally are relevant; sunk and unavoidable fixed costs are excluded.
When using a flexible budget for performance evaluation, the key purpose is to:
Answer: Compare actual costs to the costs expected at the actual level of activity
A flexible budget recalculates expected costs at actual activity levels, enabling a fair like-for-like comparison with actual results.