ACCA Differential Analysis — practice questions
34 free MCQs with worked solutions. Tap any question for the answer + explanation, or practice them all in the app.
Practice ACCA Differential Analysis in the app →Which costs belong in a differential analysis of two alternatives?Why is a sunk cost ignored in a differential analysis?Making a component costs $22.40 in materials, $14.00 in labour and $5.60 in fixed factory overhead that continA component can be bought in for $34.20 with an inbound shipping charge of $3.70. What is the relevant cost ofMaking a component costs $36.40 and buying it in costs $37.90, with quality and availability equal either way.Cost of goods sold for a product line is $480,000 and 25% of it is fixed. What is the variable cost of goods sOperating expenses for a product line are $500,000 and 40% of them are fixed. What are the variable operating A product line reports a loss from operations, yet its revenue still exceeds all of its own variable costs. WhEquipment can be leased out for $2,400 a year for four years and then returned to its manufacturer for $100 ofEquipment can be sold for $10,000 with a 2% commission payable on the sale. What is the income from selling?Removing a machine costs $900 to restore the factory site, and that amount is payable whether the machine is lA 5,000 pound batch of coffee sells for $9.70 per pound and its materials cost $5.80 per pound. What is the inProcessing a batch further produces revenue of $60,500 and causes a 4% loss of product through evaporation. WhSelling a coffee batch as it stands yields $19,500 of income, and processing it further yields $2,100 more. WhKeeping an existing machine carries variable operating costs of $21,000 a year for the next six years. What isReplacing a machine brings in $75,000 from the old asset, costs $182,000 for the new one and carries $6,000 a Keeping a machine gives a loss of $126,000 and replacing it gives a loss of $143,000. What should the company A special order of 5,000 units at $36 each carries a variable manufacturing cost of $25 per unit and a tariff A special order is priced at $36 per unit while variable manufacturing cost is $25 per unit and fixed manufactBeyond the arithmetic, what risk does accepting a special order at a reduced price carry?A proposed asset is expected to generate income of $75,000 over a useful life of five years. What is its averaAverage annual income from a proposed asset is $15,000 and the average investment is $60,000. What is the averEquipment costs $80,000, generates $25,000 of cash revenue a year and needs $5,000 a year of cash maintenance.Why is depreciation left out when net cash flow is worked out for a payback calculation?Equipment costing $80,000 generates net cash flows of $12,000, $18,000, $24,000, $26,000, $30,000 and $34,000 What is the present value of $1.00 to be received in three years at an interest rate of 6%?What is the future value of $1.00 in three years at an interest rate of 6%?Equipment costs $100,000 and gives net cash flows of $24,000 a year for six years. The present value of an annThe present value of the future net cash flows from an asset is $118,016 and the asset costs $130,000. What foAsset 1 costs $100,000 and has discounted cash flows of $121,526. Asset 2 costs $140,000 and has discounted caOne proposed asset gives cash flows for four years and a rival gives cash flows for six years. How are the twoAsset 1 has discounted cash flows of $108,724 over four years and Asset 2 has $107,733 once adjusted to the saWhat limits the usefulness of the average rate of return and cash payback methods?Alongside the numbers, what else should a differential analysis take into account?