Question 1

Section A

Quantum AI, a tech startup, classifies its costs to better understand cost behavior. Server hosting costs are charged at a flat rate of $5,000 per month for up to 10 terabytes of data processed. For every additional terabyte processed, an extra $400 is charged. How should this cost be classified?

Accepted Answer

Analyze the cost structure: it has a base flat fee (fixed) and an additional per-unit charge (variable). This combination defines a semi-variable cost.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Confusing semi-variable with stepped fixed costs. Stepped fixed costs jump in blocks, whereas semi-variable increases continuously after the fixed threshold.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA MA — Management Accounting Practice Exam 3

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