Practise 115 real questions on Cost and management accounting from 2021 to 2026. See the answer and explanation as soon as you answer.
Cost and management accounting is one of the 7 main topics in our A Level Accounting (Cambridge (CAIE) 9706) question bank, and about 27% of its real questions come from it. Tayyari Karo has 115 real questions on this topic from 2021 to 2026, from Paper 1, Paper 2, Paper 3, Paper 4; 85 are multiple choice and marked instantly, and the rest are structured questions with a model answer. By difficulty: 77 medium, 31 hard, 7 easy.
Work through the questions below, then open the explanation for each one. Redo the ones you missed a few days later.
These are real past-paper questions. Think of your answer first, then open the explanation.
What is a direct cost?
Answer: A. A - a cost that can always be traced to a cost item
A direct cost can be identified with a specific cost unit.
C/S ratio 40%. Sales revenue $100 000, fixed costs $30 000, profit $10 000. Sales revenue predicted to increase by 20%. Fixed costs unchanged. Increase in profit?
Answer: A. A - $8 000
Additional contribution = 20% x $100 000 x 40% = $8 000. Fixed costs unchanged. Increase in profit = $8 000. Answer A.
Which cost will increase as production decreases?
1 fixed costs per unit
2 total fixed costs
3 total variable costs
4 variable cost per unit
Answer: A. A - 1 only
Fixed cost per unit increases as production decreases because the same total is spread over fewer units.
What is the purpose of cost-volume-profit analysis?
Answer: C. C - planning to achieve targeted profit
CVP analysis is used to plan how to achieve a targeted profit by understanding the relationship between costs, volume, and profit.
A single product selling price $20, variable costs $8, total fixed costs $7 000. Target profit $20 000. How many units to achieve target profit?
Answer: D. D - 2 250
Required units = ($7 000 + $20 000) / ($20 - $8) = $27 000 / $12 = 2 250 units. Answer D.
Which statements explain why it is important to know the contribution per unit? 1 It helps in assessing the impact of a change in sales volume. 2 It helps in deciding whether to make or buy a product. 3 It helps in making long-term decisions.
Answer: A. A - 1 and 2
Contribution per unit helps assess sales volume changes (1) and make-or-buy decisions (2). Long-term decisions require full costing, not just contribution.
(a) Calculate overheads absorbed per unit of each product.
(b) Calculate total overheads absorbed by each product.
(c) State two reasons for under-absorption.
(d) Calculate total selling price for 1 200 units of Zed.
(e) Calculate current profit per month.
(f) Prepare a marginal costing statement using overseas supplier.
(g) Advise the directors.
(a) Total DLH = 20 000 + 23 800 = 43 800. OAR = $67 890/43 800 = $1.55/hr. Wye: 2.5 x $1.55 = $3.88. Zed: 1.7 x $1.55 = $2.64.
(b) Wye: 8 000 x $3.88 = $31 040. Zed: 14 000 x $2.64 = $36 960.
(c) Actual production less than budgeted; actual overheads greater than budgeted.
(d) Materials $8 400, labour $22 440, overheads $3 168 = $34 008. Profit 33 1/3% = $17 004. SP = $51 012.
(e) Revenue $1 512 000. Variable costs $794 500. Fixed $136 000. Profit $581 500.
(f) Revenue $1 944 000. Materials $900 000. Labour $324 000. Contribution $720 000. Fixed $118 800. Profit $601 200.
(g) For: larger profit, more workforce retained, machinery fully used. …
The full model answer is in the app.
(a) Prepare a statement to calculate the selling price per unit for Product S and Product P using traditional costing.
(b) Explain what is meant by 'activity based costing'.
(c) Prepare a statement to calculate the selling price per unit for Product S and Product P using activity based costing.
(d) Advise whether or not to adopt activity based costing, with reference to (a) and (c).
(a) Traditional costing: Product S: direct materials $8, direct labour $60, factory overheads $10 (W1), total cost $78, mark-up $39, selling price $117. Product P: direct materials $17, direct labour $108, factory overheads $15, total cost $140, mark-up $70, selling price $210. W1: Total labour hours 186 000, OAR $2.50/hour.
(b) Activity based costing assigns costs to products based on the activities that consume the resources. Activities are used as cost pools and costs are allocated to products using a cost driver. …
The full model answer is in the app.
| Session | Paper 1 | Paper 2 | Paper 3 | Paper 4 |
|---|---|---|---|---|
| May/June 2026 | 7 | 1 | – | 2 |
| May/June 2025 | 8 | 1 | – | 1 |
| October/November 2025 | 4 | 1 | – | – |
| May/June 2024 | 9 | 1 | – | 2 |
| October/November 2024 | 9 | 1 | – | 1 |
| May/June 2023 | 8 | 1 | – | 2 |
| October/November 2023 | 6 | 1 | – | 2 |
| May/June 2022 | 9 | 1 | 3 | – |
| October/November 2022 | 7 | 1 | 1 | – |
| May/June 2021 | 10 | 1 | 3 | – |
| October/November 2021 | 8 | 1 | 2 | – |
115 real A Level Accounting (9706) questions on Cost and management accounting from 2021 to 2026, from Paper 1, Paper 2, Paper 3, Paper 4. Each one shows the year, session and paper it came from.
Yes. Every question shows the correct answer and a short explanation the moment you answer.
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