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ICAN Management Accounting 2025 past questions and answers

This 2025 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 2025 set with instant marking.

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Sample ICAN Management Accounting 2025 questions

1. A furniture maker can trace the timber used in each desk directly to that desk. How should this timber cost be classified?
  1. Indirect production cost
  2. Direct material cost
  3. Administration overhead
  4. Selling overhead

Answer: B. Direct material cost

The timber is physically incorporated into each desk and can be traced economically to it, so it is direct material. Factory rent is an example of an indirect production cost, not this traceable input.

2. Within the relevant range, a factory's total monthly rent is fixed. If output increases, what normally happens to rent per unit?
  1. It remains constant
  2. It increases in direct proportion to output
  3. It becomes a variable cost
  4. It decreases

Answer: D. It decreases

Total rent remains fixed within the relevant range, so that same cost is spread across more units and rent per unit decreases. A fixed total cost does not become variable merely because output changes.

3. In a period, a manufacturer produces more units than it sells. Compared with marginal costing, which statement is normally true of absorption-costing profit, assuming inventory increases and fixed production overhead is incurred?
  1. It is lower because fixed production overhead is expensed twice
  2. It is identical because both methods expense fixed production overhead in the same way
  3. It is higher because some fixed production overhead is included in closing inventory
  4. It is lower because closing inventory excludes variable production costs

Answer: C. It is higher because some fixed production overhead is included in closing inventory

Absorption costing carries a share of fixed production overhead in unsold inventory, deferring that expense until the units are sold. Marginal costing expenses all fixed production overhead in the period, so with rising inventory absorption profit is normally higher.

4. Under marginal costing, which production cost is included in the cost of a unit of finished goods?
  1. Variable production overhead
  2. Fixed production overhead only
  3. All fixed and variable production overhead
  4. Selling and distribution overhead

Answer: A. Variable production overhead

Marginal cost includes variable production costs, including variable production overhead. Fixed production overhead is treated as a period cost rather than included in unit inventory cost; selling overhead is also not a production cost.

5. A company has fixed costs of ₦600,000 and a contribution-to-sales ratio of 40%. What is its break-even sales revenue?
  1. ₦240,000
  2. ₦1,000,000
  3. ₦1,500,000
  4. ₦2,400,000

Answer: C. ₦1,500,000

Break-even sales = fixed costs ÷ contribution-to-sales ratio = ₦600,000 ÷ 0.40 = ₦1,500,000. Multiplying fixed costs by the ratio, as in option A, does not calculate the required sales.

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