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Free ACCA Performance Management Practice Questions & Answers

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Question 211

A company allocates joint costs of 150,000 using the sales value at split-off method. Product J has sales value 90,000 and Product K has sales value 60,000 at split-off. Allocate joint costs.

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Question 212

A company's relevant cost analysis for a contract shows: direct materials in stock (originally cost 5,000, scrap value 1,200, replacement cost 6,000); skilled labour (readily available, rate 12/hr, 200 hours needed); general overhead allocated 3,000 (unavoidable). Total relevant cost?

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Question 213

A company's demand function is P = 500 - 8Q. Total fixed costs: 5,000. Variable cost per unit: 20. Find profit-maximising Q, P, total revenue, total cost and profit.

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Question 214

A company can sell 5,000 units at 45 each or 7,000 units at 38 each. Variable cost is 22/unit. Which option maximises contribution?

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Question 215

A product has: VC 35/unit; FC 200,000; selling price 75/unit. The company can increase price to 85 but expects volume to fall from 8,000 to 6,500 units. Evaluate.

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Question 216

P = 250 - 4Q; MC = 50. Find profit-maximising Q and P, then calculate total contribution (no fixed costs stated).

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Question 217

Division S (selling division): variable cost 30, full capacity. External market price 50. Division B (buying division): external purchase price 45. Group cost of capital: 15%. Assess whether internal transfer serves the group.

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Question 218

A company has three products and a single scarce machine. The following data applies: Product A: SP=100, VC=60, hrs=4, max demand=500. Product B: SP=80, VC=40, hrs=3, max demand=800. Product C: SP=60, VC=30, hrs=2, max demand=1,200. Available hours: 4,000. Fixed costs: 50,000. Calculate maximum profit.

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Question 219

A company faces two pricing options: Option 1: price 100, demand 50,000 units, VC 40. Option 2: price 85, demand 75,000 units, VC 40. Fixed costs 1,200,000. Compare profits.

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Question 220

A manufacturer has machine capacity of 12,000 hours. Product R requires 2 hours; Product S requires 3 hours. Contribution per hour: R=18; S=22. Max demand: R=4,000; S=2,500. Fixed costs: 80,000. Find profit.

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Question 221

Risk differs from uncertainty in that:

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Question 222

Expected value (EV) is:

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Question 223

The maximin strategy selects the option with:

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Question 224

The maximax strategy selects the option with:

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Question 225

Minimax regret selects the option that:

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Question 226

Sensitivity analysis tests:

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Question 227

Simulation (Monte Carlo) analysis:

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Question 228

Which of the following is a way to reduce uncertainty before a major investment decision?

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Question 229

The payback period as a risk management tool:

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Question 230

Which of the following statements about expected value is correct?

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Question 231

A project with base NPV of 250,000 is sensitive to changes in selling price such that NPV would be zero if price fell by 10%. What does this tell management?

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Question 232

Scenario planning differs from sensitivity analysis in that:

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Question 233

Which of the following is an example of financial risk (as opposed to operational or strategic risk)?

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Question 234

Which criterion for decision-making under uncertainty assumes a pessimistic view of the future?

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Question 235

Which type of risk involves the possibility that the organisation's strategy will fail to achieve its objectives?

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Question 236

Uncertainty in business decision-making can be reduced (but not eliminated) by:

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Question 237

Three outcomes: profit 200,000 (prob 0.4); profit 80,000 (prob 0.4); loss 60,000 (prob 0.2). Calculate EV.

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Question 238

Payoff matrix (profit in 000s): Option A — Boom: 400, Normal: 200, Bust: -100. Option B — Boom: 250, Normal: 220, Bust: 80. Probabilities: Boom 0.3, Normal 0.5, Bust 0.2. Apply EV and maximin.

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Question 239

Value of perfect information (VPI): without information EV = 150,000; with perfect information the expected outcome = 210,000. What is VPI?

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Question 240

Sensitivity analysis shows NPV = 300,000 with sales volume of 10,000 units. NPV = 0 if volume falls to 8,500 units. What is the sensitivity of the decision to sales volume?

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Free ACCA Performance Management Practice Questions & Answers

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