ICAN Management Accounting 2024 past questions and answers

1. Its total cost rises in direct proportion to output.
2. Its cost per unit remains constant at every output level.
3. Its total cost remains constant, while its cost per unit changes with output.
4. Its total cost falls whenever output increases.

Answer: C. Its total cost remains constant, while its cost per unit changes with output.

A fixed cost remains constant in total within the relevant range, so the amount allocated per unit falls as output rises. Option B incorrectly describes a variable cost per unit.

1. Absorption-costing profit will be higher because some fixed production overhead is included in closing inventory.
2. Marginal-costing profit will be higher because fixed production overhead is charged to inventory.
3. The profits must be identical because output exceeds sales.
4. Absorption-costing profit will be lower because closing inventory excludes variable production costs.

Answer: A. Absorption-costing profit will be higher because some fixed production overhead is included in closing inventory.

When inventory increases, absorption costing carries a portion of fixed production overhead forward in inventory, so less overhead is expensed this period. Marginal costing expenses all fixed production overhead in the period.

1. N400 favourable
2. N400 adverse
3. N10,000 favourable
4. N10,400 adverse

Answer: B. N400 adverse

The actual price exceeds the standard by N0.20 per kg, so 2,000 kg gives N400 adverse. Option A reverses the direction of the variance.

1. Additional materials required for the order
2. Extra delivery cost caused by the order
3. Contribution lost if scarce capacity is diverted from regular sales
4. A feasibility study paid for last month

Answer: D. A feasibility study paid for last month

The feasibility-study cost is sunk: it is a past cost and will not change with the decision. The other items are future incremental costs or an opportunity cost.

1. Budgeted hours for budgeted output and actual hours worked
2. Standard hours allowed for actual output and actual hours worked
3. Standard hours allowed for actual output and budgeted hours for budgeted output
4. Actual hours worked and actual hours paid

Answer: B. Standard hours allowed for actual output and actual hours worked

The efficiency variance compares actual hours with the standard hours allowed for the output actually achieved, valued at the standard labour rate. Option A uses budgeted output rather than actual output.