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100+ Free ACCA APM Practice Questions

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A divisional manager is evaluated on ROI. The division currently earns an ROI of 20%, and a new project offers a return of 16%. The group's cost of capital is 12%. If acting in self-interest under ROI, the manager will most likely:

A
B
C
D
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Key Facts: ACCA APM Exam

3h 15m

Exam Duration

ACCA APM Essentials

50%

Pass Mark

ACCA Exam Regulations

50 marks

Section A Case Study

ACCA APM Essentials

2 x 25

Section B Questions

ACCA APM Essentials

A-E

Syllabus Areas

ACCA APM Syllabus

~150 hrs

Suggested Study Time

Tuition Provider Guidance

ACCA APM is a 3-hour-15-minute computer-based, constructed-response exam at Strategic Professional level. Section A is one compulsory 50-mark case study (40 technical plus 10 professional-skills marks); Section B has two 25-mark questions (20 technical plus 5 professional-skills marks each), giving 100 marks. All questions are compulsory and the pass mark is 50%. The syllabus spans areas A-E: strategic planning and control; risk and uncertainty; performance measurement systems and design; strategic performance measurement; and performance evaluation and corporate failure. Recent syllabus updates increased the emphasis on data analytics, non-financial metrics and sustainability.

Sample ACCA APM Practice Questions

Try these sample questions to test your ACCA APM exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1In the performance hierarchy, which level of planning is concerned with the long-term direction of the whole organisation and the matching of its activities to the external environment?
A.Operational planning
B.Tactical planning
C.Strategic planning
D.Transactional processing
Explanation: Strategic planning sets the long-term direction of the entire organisation, defining mission, objectives and the broad allocation of resources to match capabilities to the external environment. It is the highest level of Anthony's planning hierarchy.
2Mendelow's matrix classifies stakeholders according to which two dimensions?
A.Power and level of interest
B.Cost and benefit
C.Risk and return
D.Probability and impact
Explanation: Mendelow's matrix maps stakeholders on a grid of power (ability to influence) against level of interest. The combination determines management strategy: key players (high/high) must be managed closely, while low/low stakeholders need only minimal effort.
3A company uses a PEST analysis to support strategic performance management. Which factor would be classified under the 'Economic' heading?
A.Changes in data protection legislation
B.An ageing population demographic
C.A forecast rise in interest rates
D.Adoption of cloud computing by competitors
Explanation: Interest rates are a macroeconomic variable affecting the cost of finance, demand and investment decisions, so they fall under the Economic heading of PEST. Identifying such external influences is central to designing performance measures that reflect environmental conditions.
4Under the building block model of Fitzgerald and Moon, the three building blocks are standards, rewards and which third element?
A.Dimensions
B.Drivers
C.Determinants
D.Deliverables
Explanation: Fitzgerald and Moon's building block model for service businesses comprises dimensions (what is measured), standards (the targets set) and rewards (how achievement is recognised). Dimensions split into results (competitiveness, financial performance) and determinants (quality, flexibility, resource utilisation, innovation).
5The balanced scorecard developed by Kaplan and Norton measures performance across four perspectives. Which of the following is NOT one of the original four?
A.Customer
B.Internal business process
C.Environmental sustainability
D.Learning and growth
Explanation: Kaplan and Norton's four perspectives are financial, customer, internal business process, and learning and growth (innovation). Environmental sustainability is not one of the original four, although organisations may add a fifth perspective to suit their strategy.
6In Lynch and Cross's performance pyramid, the level immediately below the corporate vision at the apex is concerned with objectives for which organisational unit?
A.Business units (market and financial)
B.Departments and work centres
C.Individual operations
D.External customers
Explanation: The performance pyramid cascades the corporate vision down to business units, where market-related and financial objectives are set. These then drive business operating systems (customer satisfaction, flexibility, productivity) and finally departmental measures of quality, delivery, cycle time and waste.
7A division has controllable profit of $480,000 and controllable capital employed of $3,000,000. What is its return on investment (ROI)?
A.6.25%
B.62.5%
C.16%
D.1.6%
Explanation: ROI = controllable profit / controllable capital employed = $480,000 / $3,000,000 = 16%. ROI is a relative measure expressing divisional profit as a percentage of the assets used to generate it, enabling comparison between divisions of different sizes.
8A division earns controllable profit of $600,000 on capital employed of $4,000,000. The group's cost of capital is 12%. What is the division's residual income (RI)?
A.$120,000
B.$480,000
C.$72,000
D.$1,080,000
Explanation: RI = controllable profit - (capital employed x cost of capital) = $600,000 - ($4,000,000 x 12%) = $600,000 - $480,000 = $120,000. Positive RI shows the division earns more than the imputed finance charge, adding economic value.
9Which statement best describes a key advantage of residual income (RI) over return on investment (ROI) for divisional performance evaluation?
A.RI is always easier to calculate than ROI
B.RI is a relative measure that aids comparison between divisions
C.RI ignores the cost of capital
D.RI encourages managers to accept all projects with a positive RI, promoting goal congruence
Explanation: RI rewards any project earning more than the cost of capital, so a manager will accept it even if its return is below the division's current ROI. This avoids the dysfunctional behaviour where ROI maximisation makes managers reject value-adding projects that dilute their average return.
10Economic value added (EVA) starts from net operating profit after tax (NOPAT). Which of the following adjustments is typically made when calculating EVA?
A.Adding back research and development spend and amortising it over its useful life
B.Deducting accounting depreciation a second time
C.Excluding all tax from the profit measure
D.Ignoring the weighted average cost of capital
Explanation: EVA adjusts accounting profit to a closer measure of economic profit. Discretionary spend with long-term benefit, such as R&D and advertising, is added back to profit and capitalised, then amortised over the period expected to benefit, so it is treated as an asset rather than a one-off expense.

About the ACCA APM Practice Questions

Verified exam format metadata for ACCA Advanced Performance Management (APM) is pending. The practice questions above remain available while official exam length, timing, passing score, fee, and administrator details are reviewed.