PM B Specialist cost and management accounting techniques

Written by Mahnoor Sheikh (ACCA)

ACCA · Performance Management · 9 questions

Name: ____________________ Date: ____________

Setup costs are $60,000 for 100 setups. A product needs 30 setups. What setup cost is charged to the product?
- A $18,000
- B $2,000
- C $18
- D $60,000
Which statement about ABC is correct?
- A It ignores overheads
- B It uses one overhead rate for the whole factory
- C It is quicker and cheaper to set up than absorption costing
- D It assigns overheads to products using the activities that cause the costs
The market will pay $50 and the required margin is 20 percent of the selling price. What is the target cost?
- A $30
- B $10
- C $40
- D $60
Why does life-cycle costing matter for design decisions?
- A It ignores costs after the sale
- B Many of a product's costs are committed at the design stage
- C It only measures production costs
- D Design costs are not important
In throughput accounting, throughput is:
- A Sales revenue less labour cost
- B The number of units produced
- C Sales revenue less all costs
- D Sales revenue less direct material cost
A product earns a return per bottleneck hour of $50. The cost per factory hour is $30. What is the throughput accounting ratio?
- A 0.60
- B 1.67
- C 1.00
- D 20.00
A throughput accounting ratio below 1 for a product means that:
- A The product earns less from the bottleneck than the cost of using it
- B The product is the most profitable
- C The product has no direct materials
- D There is no bottleneck
Which technique tracks the flow of materials and the cost of waste through a process?
- A Flow cost accounting
- B Zero-based budgeting
- C Cost-plus pricing
- D Target costing
A cost driver is:
- A The factor that causes the cost of an activity to change
- B The total overhead cost
- C The selling price
- D The cost of direct materials

Answer key

1. A, 2. D, 3. C, 4. B, 5. D, 6. B, 7. A, 8. A, 9. A

Cost per setup = $600. 30 x $600 = $18,000.
ABC uses cost drivers for each cost pool.
Target cost = price less the required profit = 50 - 10.
Decisions made during design lock in most of the product's later costs.
Labour and overheads are treated as fixed factory costs.
Ratio = return per factory hour / cost per factory hour = 50 / 30.
A ratio below 1 is a warning sign.
Flow cost accounting is an environmental management accounting technique.
Examples are the number of setups or inspections.