A past cost that has already been incurred and cannot be recovered

A future cost that can be avoided

A cost shared across multiple products

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Free ACCA Performance Management Practice Questions & Answers

400 exam-style Performance Management questions. Pick your answer, hit Check answer, and see the worked solution — free to start, no signup.

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Question 151

A company uses a 20% learning curve for a new product. First unit takes 100 hours. What is the average time per unit after 4 units?

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Question 152

A company prepares a master budget. The correct sequence for preparing functional budgets is:

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Question 153

A company budgets for 12,000 units but actual production is 14,500 units. Fixed costs budget was 96,000; actual fixed costs 98,000. Variable cost budget was 8/unit; actual variable cost 8.20/unit. Prepare a flexed budget and calculate the variable cost variance.

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Question 154

What is the key difference between a budget and a forecast?

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Question 155

What is budget-constrained behaviour and why is it a problem?

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Question 156

A company's cash budget shows a 50,000 deficit in month 3. Which actions should management take?

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Question 157

A company's master budget shows: Revenue 1,800,000; variable costs 1,080,000; fixed costs 540,000; profit 180,000. Actual revenue: 1,900,000; actual VC: 1,160,000; actual FC: 555,000; actual profit: 185,000. Prepare a flexed budget and identify which variances explain the performance.

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Question 158

A company operates across three countries with different inflation rates (5%, 8%, 12%). It prepares a single global budget in the group currency. What budgeting challenge does this create?

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Question 159

A company has a sales budget of 20,000 units. Opening inventory: 3,000 units. Required closing inventory: 4,000 units. What is the production budget in units?

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Question 160

A company uses a fixed annual budget. Midway through the year, a major competitor unexpectedly enters the market, significantly reducing demand. What should management do?

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Question 161

A company uses activity-based budgeting. Forecast: 15,000 customer orders. Cost driver rate for order processing: 35/order. What is the budget for order processing costs?

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Question 162

The budget for direct materials shows: required for production 40,000 units at 3 kg/unit = 120,000 kg; opening inventory 15,000 kg; required closing inventory 12,000 kg. Calculate the quantity to purchase and cost at standard price of 8/kg.

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Question 163

A company's cash budget shows: receipts 500,000; payments 560,000; opening balance 45,000. What is the closing cash balance and what action should management take?

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Question 164

A company's sales budget shows 6,000 units for Q1. Opening finished goods inventory: 800 units. Required closing inventory: 500 units. Production budget for Q1:

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Question 165

A division operates in a market with high volatility (currency, commodity prices, demand). The CFO argues that a fixed annual budget is inappropriate. Design an alternative planning framework for this division.

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Question 166

A company implements ZBB for the first time. Managers submit 3 decision packages per department: minimum (50% funding — critical activities only), current (100% — maintain existing service), enhanced (130% — improved service). The board approves 80% of current budget. Describe how ZBB differs from incremental budgeting in this context and identify one key risk.

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Question 167

A global retail chain's budgeting director argues that the company should use rolling 3-month detailed forecasts combined with a 12-month high-level plan, rather than a detailed annual budget. The CFO is concerned about accountability. Develop a framework that addresses both concerns.

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Question 168

A company operates in a highly seasonal market. Quarterly revenues: Q1=200,000; Q2=600,000; Q3=800,000; Q4=300,000. Fixed costs: 100,000/quarter. Variable costs: 40% of revenue. Should the company use monthly, quarterly or annual budgets for this business?

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Question 169

A group operates in 12 countries. The CFO proposes a single global rolling forecast updated monthly, with all subsidiaries submitting standardised data in USD by the 5th of each month for consolidation by the 10th. Identify three practical challenges with this approach.

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Question 170

A relevant cost for decision-making must be:

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Question 171

A sunk cost is:

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Question 172

An opportunity cost is:

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Question 173

Cost-plus pricing adds a mark-up to:

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Question 174

Penetration pricing involves:

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Question 175

Price skimming involves:

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Question 176

Price elasticity of demand (PED) of -1.5 means:

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Question 177

Relevant costs for a special order include:

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Question 178

Profit-maximising output is found where:

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Question 179

A joint product arises when:

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Question 180

A shutdown decision requires comparison of:

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Free ACCA Performance Management Practice Questions & Answers

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