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ACCA Applied Skills — Performance Management (PM) practice questions are available now; exam metadata is being verified.

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A division earns ROI of 18%; the group cost of capital is 12%. A new project offers a return of 15%. Judged on ROI alone, the manager will likely:

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B
C
D
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2026 Statistics

Key Facts: ACCA PM Exam

3 hours

Session CBE Duration

ACCA PM Essentials

100

Total Marks

ACCA PM Syllabus

50%

Pass Mark

ACCA Exam Regulations

5 areas

Syllabus Areas A-E

ACCA PM Syllabus 2025-26

~40%

Recent Pass Rate

ACCA Pass Rates

15 OTs

Section A Questions

ACCA PM Essentials

ACCA PM is a 3-hour session computer-based exam worth 100 marks with a 50% pass mark. Section A has 15 two-mark objective-test questions; Section B has 3 case questions each containing five two-mark OT items; Section C has 2 twenty-mark constructed-response questions. The 2025-26 syllabus spans five areas: A management information systems and data analytics, B specialist cost and management accounting techniques, C decision-making techniques, D budgeting and control, and E performance measurement and control. Global pass rates have been around 40%. This free bank builds 100 objective-test-style MCQs across all five areas.

Sample ACCA PM Practice Questions

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

1Under activity-based costing (ABC), what is the role of a cost driver?
A.It is the total overhead absorbed by a product
B.It is the factor that causes the cost of an activity to change
C.It is the rate used to apply direct labour to output
D.It is the budgeted profit margin per unit
Explanation: A cost driver is the factor that causes the cost of an activity to be incurred (for example, number of set-ups or purchase orders). ABC pools costs by activity and then assigns them using the relevant driver, giving more accurate product costs than a single volume-based overhead rate.
2A company uses target costing. Selling price is set at $50 and the required profit margin is 20% of selling price. What is the target cost per unit?
A.$30
B.$42
C.$60
D.$40
Explanation: Target cost = target selling price minus required profit. Required profit = 20% x $50 = $10, so target cost = $50 - $10 = $40. Target costing works backwards from a market-driven price and a desired margin to the maximum allowable cost.
3In throughput accounting, the throughput accounting ratio (TPAR) is calculated as:
A.Return per factory hour divided by cost per factory hour
B.Sales revenue divided by total costs
C.Contribution per unit divided by sales price
D.Throughput per unit divided by material cost per unit
Explanation: The TPAR equals return per factory hour (throughput per hour on the bottleneck) divided by the cost per factory hour (total factory cost per bottleneck hour). A TPAR above 1 means the product earns more than it costs to run the bottleneck and is worth producing.
4Life-cycle costing is most useful because it:
A.Ignores costs incurred before production starts
B.Accumulates all costs over a product's entire life, including design and decommissioning
C.Only measures costs during the maturity phase
D.Replaces the need for budgeting
Explanation: Life-cycle costing tracks all costs from research and design through to decommissioning, recognising that a large proportion of total costs is committed at the design stage. This gives a fuller view of profitability than period-based costing, which often ignores pre-production and end-of-life costs.
5A product has activity costs: machine set-ups $40,000 for 200 set-ups, and the product requires 25 set-ups. What set-up cost is assigned to this product under ABC?
A.$5,000
B.$4,000
C.$8,000
D.$10,000
Explanation: The cost-driver rate is $40,000 / 200 set-ups = $200 per set-up. The product uses 25 set-ups, so assigned cost = 25 x $200 = $5,000. ABC charges overheads in proportion to actual driver consumption rather than volume.
6Which statement best describes 'environmental management accounting' (EMA) as covered in the PM syllabus?
A.It is only concerned with legal compliance fines
B.It identifies, collects and analyses environment-related costs to support decisions
C.It excludes any non-financial information
D.It is identical to traditional absorption costing
Explanation: EMA identifies, collects, analyses and uses environment-related cost and physical (e.g. energy, water, waste) information to support management decisions. It often reveals hidden costs buried in general overheads and supports sustainability-driven decision-making.
7A bottleneck resource provides 1,000 hours. Product X earns throughput of $30 per unit and uses 0.5 hours; Product Y earns $20 and uses 0.2 hours. Which product should be prioritised under throughput accounting?
A.Product X, because its throughput per unit is higher
B.Both equally
C.Neither; prioritise by sales price
D.Product Y, because its throughput per bottleneck hour is higher
Explanation: Throughput accounting ranks by throughput per bottleneck hour. X = $30 / 0.5 = $60/hour; Y = $20 / 0.2 = $100/hour. Y earns more per scarce hour, so it should be prioritised, mirroring the limiting-factor logic applied to the constraint.
8Compared with traditional absorption costing, ABC tends to assign HIGHER unit costs to products that are:
A.Low-volume and complex
B.High-volume and simple
C.Sold at the highest price
D.Made from the cheapest materials
Explanation: ABC traces overheads via activity drivers, so low-volume, complex products that consume many set-ups, inspections or special handling absorb more overhead than under a volume-based rate. Traditional absorption costing tends to under-cost these and over-cost high-volume simple lines.
9In target costing, if the estimated cost exceeds the target cost, the difference is known as the:
A.Contribution margin
B.Margin of safety
C.Cost gap
D.Variance ratio
Explanation: The cost gap is the amount by which the estimated cost exceeds the target cost. Management must close it through value engineering, redesign, supplier negotiation or process improvement so the product can be sold profitably at the market price.
10Total factory costs are $200,000 and the bottleneck provides 5,000 hours. A product earns throughput of $80 per unit and uses 1 hour of bottleneck time. What is its throughput accounting ratio (TPAR)?
A.1.0
B.2.0
C.1.6
D.0.625
Explanation: Cost per factory hour = $200,000 / 5,000 = $40. Return per factory hour = $80 / 1 hour = $80. TPAR = $80 / $40 = 2.0, meaning the product generates twice the factory cost per bottleneck hour and is clearly worth producing.

About the ACCA PM Practice Questions

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