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ICAN Management Accounting 2023 past questions and answers

This 2023 ICAN Management Accounting set has 20 practice questions. Try these 5 free sample questions, tap a question to reveal the answer and explanation. Then practise the whole 2023 set with instant marking.

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Sample ICAN Management Accounting 2023 questions

1. Within the relevant range, which statement best describes a variable production cost?
  1. Total cost changes in proportion to output, while cost per unit remains constant.
  2. Total cost remains constant, while cost per unit changes with output.
  3. Both total cost and cost per unit remain constant.
  4. Total cost changes only when the selling price changes.

Answer: A. Total cost changes in proportion to output, while cost per unit remains constant.

Within the relevant range, a variable cost moves in total with activity and stays constant per unit. Option B describes a fixed cost in total, not a variable cost.

2. Under absorption costing, how is fixed manufacturing overhead treated when valuing finished goods inventory?
  1. It is excluded from inventory and charged wholly to the period.
  2. It is included in inventory as part of production cost.
  3. It is included only when the goods are sold.
  4. It is treated as a selling and distribution cost.

Answer: B. It is included in inventory as part of production cost.

Absorption costing includes both variable and fixed manufacturing overhead in product cost, so unsold units carry a share of fixed production overhead. Option A describes marginal costing.

3. A department's actual electricity expense is ₦485,000 against a budget of ₦450,000 for the same activity level. From the department's cost-control perspective, the expense variance is:
  1. ₦35,000 favourable.
  2. ₦485,000 adverse.
  3. ₦35,000 adverse.
  4. ₦450,000 favourable.

Answer: C. ₦35,000 adverse.

Actual expense exceeds budget by ₦485,000 − ₦450,000 = ₦35,000, which is adverse for a cost. Option A reverses the direction of the variance.

4. A product sells for ₦2,000 per unit and has variable cost of ₦1,500 per unit. Monthly fixed costs are ₦250,000. What is the break-even output?
  1. 125 units
  2. 250 units
  3. 400 units
  4. 500 units

Answer: D. 500 units

Contribution per unit is ₦2,000 − ₦1,500 = ₦500. Break-even output is ₦250,000 ÷ ₦500 = 500 units; option C understates the required output.

5. When the material price variance is calculated on the quantity purchased, which formula is used? Use a positive result to denote favourable and a negative result to denote adverse.
  1. Quantity purchased × (standard price − actual price)
  2. Standard quantity for actual output × (standard price − actual price)
  3. Actual price × (standard quantity for actual output − actual quantity used)
  4. Standard price × (actual quantity used − standard quantity for actual output)

Answer: A. Quantity purchased × (standard price − actual price)

On a purchases basis, the price variance is actual quantity purchased multiplied by the difference between standard and actual price. Option B uses the standard quantity allowed for output, which is not the purchased quantity basis.

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