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ACCA Performance Management (PM) 2025 past questions and answers

This 2025 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 2025 set with instant marking.

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Sample ACCA Performance Management (PM) 2025 questions

1. A factory uses activity-based costing. The annual setup pool is $48,000 for 120 setups, and the inspection pool is $36,000 for 300 inspections. Product L requires 15 setups and 40 inspections for a batch of 1,000 units. What ABC overhead cost is assigned per unit?
  1. $9.60
  2. $10.20
  3. $12.00
  4. $10.80

Answer: D. $10.80

Setup cost is $48,000/120 = $400 per setup, giving $6,000 for the batch; inspection cost is $36,000/300 = $120 each, giving $4,800. Total batch overhead is $10,800, or $10.80 per unit; using a single volume-based rate would not follow the stated activity drivers.

2. A medical-device company has one bottleneck machine. Product Alpha sells for $90, uses direct material costing $30, and takes 20 bottleneck minutes per unit. Product Beta sells for $80, uses direct material costing $20, and takes 15 bottleneck minutes. Under throughput accounting, which product should be prioritised if demand exists for both?
  1. Alpha, because its selling price is higher
  2. Beta, because throughput per bottleneck minute is higher
  3. Alpha, because its throughput per unit is higher
  4. Either product, because their throughput per unit is equal

Answer: B. Beta, because throughput per bottleneck minute is higher

Throughput is sales price less direct material: $60 for each product. Alpha earns $60/20 = $3 per bottleneck minute, while Beta earns $60/15 = $4. Ranking by total throughput per unit alone misses the scarce-resource constraint.

3. A component supplier offers 7,000 units for $13.50 each. If the company makes the component, variable cost is $12 per unit and avoidable fixed cost is $18,000. An allocated head-office charge of $30,000 will continue whichever option is selected. What should the company do?
  1. Buy the component; relevant cost is $7,500 lower
  2. Make the component; relevant cost is $7,500 lower
  3. Buy the component; relevant cost is $30,000 lower
  4. Make the component; relevant cost is $30,000 lower

Answer: A. Buy the component; relevant cost is $7,500 lower

Relevant make cost is (7,000 × $12) + $18,000 = $102,000. Buy cost is 7,000 × $13.50 = $94,500, a $7,500 saving; the unavoidable head-office allocation is irrelevant to the choice.

4. A workshop can sell all it makes of products P and Q, but has only 240 kg of a special alloy. P earns contribution of $48 per unit and uses 3 kg; Q earns $60 per unit and uses 5 kg. Demand is at least 50 units of P and 100 units of Q. Which production plan maximises contribution?
  1. Make 48 units of Q only
  2. Make 40 units of P and 24 units of Q, allocating the alloy equally between the products
  3. Make 50 units of P and 18 units of Q, prioritising P because its contribution per kg is higher
  4. Make 30 units of P and 30 units of Q, prioritising Q because its contribution per unit is higher

Answer: C. Make 50 units of P and 18 units of Q, prioritising P because its contribution per kg is higher

P earns $48/3 = $16 per kg, compared with Q's $60/5 = $12 per kg, so make P first. Fifty P use 150 kg, leaving 90 kg for 18 Q; this uses all 240 kg and earns $3,480 contribution. The equal-allocation plan in B earns only $3,360.

5. A food producer is choosing one capacity project. Project X would generate a contribution of $100,000 if demand is high (probability 0.6) and $20,000 if demand is low (probability 0.4). Project Y would generate $62,000 with certainty. Ignore other effects. Which project has the higher expected contribution?
  1. Project Y, by $6,000
  2. Project Y, by $10,000
  3. They have the same expected contribution
  4. Project X, by $6,000

Answer: D. Project X, by $6,000

Expected contribution for X is (0.6 × $100,000) + (0.4 × $20,000) = $68,000. This exceeds Y's certain $62,000 by $6,000; the expected-value decision does not mean X is less risky.

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