Management Accounting Exam Practice: Variances, Budgets, Cost-Volume-Profit, Pricing Decisions & Performance Measures

What you'll build

What you will be able to do

Each lab ends with a concrete result that you build yourself and the checker confirms, cell by cell.

• Answer a classic exam-style opener: flex the budget to the actual volume, then split the profit difference into the sales volume, sales price, variable cost and fixed cost variances – and check that they reconcile.
• Work through a full material and labour variance question: price and usage per material, labour rate and efficiency, then split the material usage variance into mix and yield.
• Compute the four overhead variances of an absorption-costing question and prove that the fixed overhead variances explain the under-absorption.
• Solve a multi-product cost-volume-profit question: weighted average contribution, break-even units in total and per product, break-even revenue with the weighted C/S ratio, and the margin of safety.
• Solve a limiting-factor question: contribution per machine hour, ranking with RANK.EQ, hours allocated in rank order, the optimal production plan and its total contribution.
• Set the limits of a transfer price: spare capacity, the opportunity cost of parts that replace external sales, the seller's minimum average price, the buyer's maximum and the range in between.
• Appraise an investment with the five measures exam questions ask for: payback, discounted payback, NPV, IRR and the profitability index.
• Compare divisions by ROI and residual income, split ROI into margin × turnover, show why a ROI target can make a manager reject a good project – and finish with a timed mixed mock exam.