Question 1

Section A

ArtisanWood crafts bespoke furniture. The company is adopting Activity-Based Costing (ABC). The total quality inspection costs for the year are $120,000. The cost driver is the number of inspections.

During the year, ArtisanWood expects to conduct 4,000 inspections in total. Product 'OakTable' requires 150 inspections.

Calculate the total quality inspection cost allocated to the 'OakTable' product line for the year. (Enter the number only, without the $ sign).

Accepted Answer

Step 1: Calculate the Cost per Driver (Total Cost / Total Driver Volume). Step 2: Multiply the Cost per Driver by the number of drivers used by the specific product.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Dividing $120,000 by 150 instead of the total pool of 4,000.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA PM — Performance Management Practice Exam 1

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