Question 1

Section A

HopeFoundation, an NGO, wants to introduce a new community meal program. The local government will grant a fixed funding of $5.00 per meal provided. The NGO requires a 20% 'surplus' margin on the funding received to cover central administrative overheads. The current estimated cost to produce one meal is $4.30. What is the target cost gap per meal?

Accepted Answer

Calculate the Target Cost: Funding minus Required Margin. Then calculate the Cost Gap: Estimated Cost minus Target Cost.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Calculating the margin on cost instead of on the funding (selling price), or forgetting to subtract the target cost from the estimated cost.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA MA — Management Accounting Practice Exam 3

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