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ACCA Performance Management (PM) 2024 past questions and answers

This 2024 ACCA Performance Management (PM) set has 20 practice questions. Try these 5 free sample questions, tap a question to reveal the answer and explanation. Then practise the whole 2024 set with instant marking.

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Sample ACCA Performance Management (PM) 2024 questions

1. A manufacturer uses activity-based costing for Product P. The annual overhead pool for machine setups is £90,000 for 90 setups, and the pool for inspections is £180,000 for 450 inspections. Product P requires 30 setups and 120 inspections. How much overhead should be assigned to Product P?
  1. £48,000
  2. £72,000
  3. £78,000
  4. £90,000

Answer: C. £78,000

The setup rate is £90,000/90 = £1,000 per setup, and the inspection rate is £180,000/450 = £400 per inspection. Product P receives (30 × £1,000) + (120 × £400) = £78,000; £48,000 omits setup overhead.

2. A factory has a single bottleneck resource. Product K sells for £80, uses direct materials costing £32 and requires 12 bottleneck minutes. Product M sells for £70, uses direct materials costing £28 and requires 7 bottleneck minutes. Under throughput accounting, which product should be prioritised? Assume throughput is sales price less direct material cost.
  1. Product M, because its throughput per bottleneck minute is £6
  2. Product K, because its throughput per unit is £48
  3. Product K, because its throughput per bottleneck minute is £4
  4. Either product, because both have throughput of £4 per minute

Answer: A. Product M, because its throughput per bottleneck minute is £6

K earns throughput of £80 − £32 = £48, or £48/12 = £4 per bottleneck minute. M earns £70 − £28 = £42, or £42/7 = £6 per minute, so M uses the constraint more profitably.

3. A business is designing a new product for a competitive market. Research indicates a selling price of £250 per unit, and management requires a profit margin of 20% of selling price. What is the target cost per unit?
  1. £150
  2. £180
  3. £210
  4. £200

Answer: D. £200

The required profit is 20% × £250 = £50 per unit. Target cost is £250 − £50 = £200; £210 would result from using a 16% margin rather than the stated 20%.

4. A company receives a one-off order requiring 100 units of a material already held in inventory. The material is regularly used in production and would be replaced at the current purchase price of £8 per unit. The original purchase price was £6 per unit. What material cost is relevant to the order?
  1. £600
  2. £800
  3. £1,400
  4. Nil, because the material is already in inventory

Answer: B. £800

Because the material is regularly used, accepting the order means replacing the units consumed. The relevant cost is 100 × current replacement price of £8 = £800. The original £6 purchase price is sunk and is not relevant.

5. A business can make Products A and B but is restricted by the availability of a special material. Product A earns contribution of £30 per unit and uses 3 kg of the material. Product B earns £36 per unit and uses 4 kg. Which product should be ranked first when allocating the material?
  1. Product A, with contribution of £10 per kg
  2. Product B, with contribution of £9 per kg
  3. Product B, because its contribution per unit is higher
  4. Both products, because their contribution per kg is equal

Answer: A. Product A, with contribution of £10 per kg

A earns £30/3 = £10 contribution per kg; B earns £36/4 = £9 per kg. The limiting material should be allocated first to A, even though B has the higher contribution per finished unit.

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