Management Accounting
66 practice questions with explanations — 15 free to try
PassNova has 66 ACCA Applied Knowledge practice questions on Management Accounting, each with a clear explanation. A 15-question taster is free with no sign-up; the full bank is part of PassNova Premium. Updated for 2026.
Management Accounting: example questions & answers
5 worked examples with answers and explanations below. Try 15 ACCA Applied Knowledge questions free in the browser; the full 66-question Management Accounting bank is part of PassNova Premium.
Which of the following costs would be classified as a DIRECT COST in a manufacturing business?
- AThe production supervisor's annual salary
- BRaw material used directly in production✓
- CFactory rental costs
- DDepreciation of the factory machinery each year
Answer: A direct cost can be traced directly to a specific cost unit (product). Raw materials used in production are a direct material cost. Factory rent, machine depreciation, and supervisory salaries are typically indirect (overhead) costs.
What is the contribution per unit if the selling price is £25, variable costs are £15, and fixed costs absorbed are £4 per unit?
- A£21
- B£14
- C£10✓
- D£6
Answer: Contribution per unit = Selling price − Variable costs = £25 − £15 = £10. Fixed costs are NOT deducted when calculating unit contribution; they are covered in total by the overall contribution to derive profit.
A business has fixed costs of £60,000, a selling price of £20 per unit, and variable costs of £12 per unit. What is the BREAK-EVEN POINT in units?
- A5,000 units
- B3,000 units
- C10,000 units
- D7,500 units✓
Answer: Contribution per unit = £20 − £12 = £8. Break-even point = Fixed costs ÷ Contribution per unit = £60,000 ÷ £8 = 7,500 units. At this output, total contribution exactly covers fixed costs and profit is zero.
Which costing method absorbs ALL manufacturing costs — both fixed and variable — into product costs?
- AActivity-based costing
- BStandard costing
- CAbsorption costing✓
- DMarginal costing
Answer: Absorption costing (full costing) includes both fixed and variable manufacturing costs in unit product costs. Fixed production overheads are absorbed into inventory, unlike marginal costing where they are period costs.
Under MARGINAL COSTING, fixed production overheads are treated as:
- AIncluded in the cost of each unit of inventory produced
- BA period cost charged in full to the income statement when incurred✓
- CCapitalised as part of the cost of non-current assets
- DAbsorbed into units using a predetermined overhead absorption rate
Answer: Under marginal costing, only variable costs are treated as product costs. Fixed production overheads are period costs — written off in full to the income statement in the period they are incurred.