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ACCA Skills Level — free MCQ practice

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ACCA Skills Level subjects

Management Accounting (57)

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Cost Volume Profit AnalysisDifferential AnalysisVariable Costing AnalysisVariance AnalysisActivity-Based Costing

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In activity based costing, what is an activity?Read the answer and worked solution →Budgeted total cost of setups is $1,700 and the budgeted number of setups is 34. What is the activity rate for setups?Read the answer and worked solution →Total fixed costs are $480 whether 200 or 800 pizzas are sold. What is the fixed cost per pizza at a volume of 800 pizzas?Read the answer and worked solution →Variable cost is $12 per unit. In the busiest month 2,900 units were sold at a total cost of $69,800. What are the fixed costs?Read the answer and worked solution →

Worked practice questions

In activity based costing, what is an activity?

  1. A department that reports its own overhead total
  2. A product line that carries a separate price list
  3. A period cost charged straight to profit or loss
  4. A unit of work that consumes resources when done
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Correct answer: D. A unit of work that consumes resources when done

1. An activity is a unit of work that consumes resources when a company performs it. 2. Setups, moves, inspections and cleanups are typical activities in a factory. 3. The thing the activity is performed on is the cost object, such as the product or job. 4. A department is a place where activities happen rather than an activity in its own right. _Source: Jonick, Principles of Managerial Accounting (UNG Press, CC BY-SA 4.0), section 4.4 Activity-Based Costing for a Manufacturing Business to Estimate Factory Overhead_

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Budgeted total cost of setups is $1,700 and the budgeted number of setups is 34. What is the activity rate for setups?

  1. $50 per setup
  2. $25 per setup
  3. $15 per setup
  4. $10 per setup
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Correct answer: A. $50 per setup

1. An activity rate divides the budgeted cost of the activity by the budgeted quantity of its activity base. 2. Setups cost $1,700 in total and 34 setups are budgeted. 3. $1,700 divided by 34 setups gives $50 per setup. 4. $15 is the rate for moves, $25 for inspections and $10 for cleanups, so each belongs to a different activity. _Source: Jonick, Principles of Managerial Accounting (UNG Press, CC BY-SA 4.0), section 4.4 Activity-Based Costing for a Manufacturing Business to Estimate Factory Overhead_

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Total fixed costs are $480 whether 200 or 800 pizzas are sold. What is the fixed cost per pizza at a volume of 800 pizzas?

  1. $2.40 per pizza
  2. $0.60 per pizza
  3. $1.20 per pizza
  4. $0.80 per pizza
Show answer and solution

Correct answer: B. $0.60 per pizza

1. Total fixed cost stays at $480 across the relevant range, so only the divisor changes. 2. Fixed cost per unit is $480 divided by the number of units sold. 3. $480 divided by 800 pizzas gives $0.60 per pizza. 4. $2.40 is the figure at 200 pizzas, where the same $480 is spread over far fewer units. _Source: Jonick, Principles of Managerial Accounting (UNG Press, CC BY-SA 4.0), section 5.1 Introduction_

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