E5 Pricing, budgeting and control

Written by Saad Rahman (ACCA)

ACCA · New at Expertise level · 8 questions

Name: ____________________ Date: ____________

Demand is P = 80 - 0.01Q and marginal cost is $20. What is the profit-maximising quantity?
- A 4,000
- B 6,000
- C 3,000
- D 2,000
With the same demand equation (P = 80 - 0.01Q) and marginal cost of $20, what is the profit-maximising price?
- A $20
- B $60
- C $50
- D $80
What is the main feature of green budgeting?
- A It sets only financial targets
- B It builds sustainability goals and targets into the budget
- C It ignores the environment
- D It removes all costs
Which budgeting approach is best suited to an uncertain and volatile environment?
- A No budget
- B Fixed annual budgeting
- C Rolling budgeting
- D Incremental budgeting only
What is the problem with setting a budget target that is too difficult?
- A Managers may give up, so motivation falls
- B Managers always work harder
- C It has no effect
- D Costs fall automatically
Which principle says that managers should be judged only on what they can influence?
- A Materiality
- B Controllability
- C Prudence
- D Consistency
What is a limitation of variance analysis?
- A It uses future data
- B It cannot be calculated
- C It ignores non-financial and external factors
- D It is too simple
What is the purpose of a planning variance?
- A To increase sales
- B To reduce costs
- C To separate the effect of changes in the standard that are outside the manager's control
- D To measure efficiency only

Answer key

1. C, 2. C, 3. B, 4. C, 5. A, 6. B, 7. C, 8. C