100+ Free ICAEW ACA Business Insight and Performance Practice Questions

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Key Facts: ICAEW ACA Business Insight and Performance Exam

55%

Pass Mark

ICAEW Exam Guide

2 hours

Exam Duration (Next Gen ACA)

ICAEW Exam Guide

20%

Scenario Question Weight

ICAEW Exam Guide

Certificate

ACA Level

ICAEW Next Gen ACA Syllabus

Replaces MI

Successor to Management Information

ICAEW Next Gen ACA Syllabus

100

Free Practice Questions

OpenExamPrep

Business Insight and Performance (BIP) is the Next Generation ACA Certificate Level exam that replaced Management Information and merged in parts of the retired Business Technology and Finance module. It is a computer-based objective test with a 55% pass mark, combining multiple-choice, multi-part and multiple-response questions and numerical entry with one scenario-based question worth 20% of the marks. The syllabus spans costing and pricing, budgeting, forecasting and variance analysis, performance management and decision-making (CVP, relevant costing, investment appraisal), and working capital, short-term finance and the business technology, data, economics, sustainability and ethics themes that underpin the ACA.

Sample ICAEW ACA Business Insight and Performance Practice Questions

Try these sample questions to test your ICAEW ACA Business Insight and Performance exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1A company classifies its factory rent as a fixed cost. Within the relevant range, what happens to the fixed cost PER UNIT as production volume increases?

A.It decreases

B.It increases

C.It stays constant

D.It first rises then falls

Explanation: Total fixed costs remain unchanged within the relevant range, so spreading them over more units reduces the fixed cost per unit. This is why higher volumes improve unit economics under absorption costing.

2A variable cost is best described as a cost that:

A.Stays the same in total regardless of activity

B.Changes in total in direct proportion to activity, but is constant per unit

C.Changes per unit as activity changes but is constant in total

D.Has both a fixed and a variable element

Explanation: A pure variable cost rises or falls in total in line with activity, while remaining constant per unit (e.g. direct material per unit). This contrasts with fixed costs, which are constant in total but vary per unit.

3Using the high-low method: at 10,000 units total cost is £85,000; at 6,000 units total cost is £61,000. What is the variable cost per unit?

A.£10.17

B.£8.50

C.£6.00

D.£4.00

Explanation: Variable cost per unit = change in cost / change in units = (85,000 − 61,000) / (10,000 − 6,000) = 24,000 / 4,000 = £6.00. The high-low method isolates the variable rate from the two activity extremes.

4Continuing the high-low data (variable cost £6/unit; total cost £85,000 at 10,000 units), what is the total fixed cost?

A.£24,000

B.£60,000

C.£85,000

D.£25,000

Explanation: Fixed cost = total cost − variable cost = 85,000 − (10,000 × £6) = 85,000 − 60,000 = £25,000. The same fixed figure is obtained at the low point: 61,000 − (6,000 × £6) = £25,000.

5Under absorption costing, which of the following is included in the valuation of closing inventory but is EXCLUDED under marginal costing?

A.Fixed production overhead

B.Direct labour

C.Direct materials

D.Variable production overhead

Explanation: Marginal costing values inventory at variable production cost only, whereas absorption costing also includes fixed production overhead. This causes the two methods to report different profits when inventory levels change.

6A company's inventory level INCREASED during the period. Compared with marginal costing, absorption costing profit will be:

A.Lower

B.Higher

C.The same

D.Lower only if sales fell

Explanation: When inventory rises, absorption costing carries some fixed production overhead forward in closing inventory rather than charging it all to the period. Less fixed overhead hits the income statement, so absorption profit is higher than marginal profit.

7A product uses 2 kg of material at £5/kg and 0.5 hours of labour at £12/hour. Variable overhead is absorbed at £4 per labour hour. What is the marginal (variable) cost per unit?

A.£16.00

B.£20.00

C.£18.00

D.£22.00

Explanation: Material 2 × £5 = £10; labour 0.5 × £12 = £6; variable overhead 0.5 × £4 = £2. Marginal cost = 10 + 6 + 2 = £18.00. Marginal cost includes only variable elements.

8An overhead absorption rate is calculated as £8 per machine hour based on budgeted overhead of £400,000. What was the budgeted level of machine hours?

A.32,000 hours

B.40,000 hours

C.3,200,000 hours

D.50,000 hours

Explanation: Absorption rate = budgeted overhead / budgeted activity, so budgeted activity = 400,000 / 8 = 50,000 machine hours. The rate is set in advance from the budget to charge overhead to units.

9Budgeted overhead was £200,000 and budgeted hours 40,000 (rate £5/hour). Actual overhead was £210,000 and actual hours 38,000. Overhead has been:

A.Under-absorbed by £30,000

B.Under-absorbed by £20,000

C.Over-absorbed by £20,000

D.Over-absorbed by £10,000

Explanation: Absorbed overhead = 38,000 × £5 = £190,000; actual overhead = £210,000. Absorbed is less than actual, so overhead is under-absorbed by £210,000 − £190,000 = £30,000. Under-absorption is charged to the income statement.

10In activity-based costing (ABC), overhead costs are first collected into cost pools and then charged to products using:

A.A single plant-wide absorption rate

B.Cost drivers that cause the activity

C.Direct labour hours only

D.Sales revenue percentages

Explanation: ABC assigns overhead to products using cost drivers, the activities that actually cause cost to be incurred (e.g. number of set-ups, orders, inspections). This gives more accurate product costs than a single volume-based rate when overheads are diverse.

About the ICAEW ACA Business Insight and Performance Exam

Business Insight and Performance is a Next Generation ACA Certificate Level module that replaced Management Information and absorbed elements of the retired Business Technology and Finance module. It tests costing and pricing, budgeting and forecasting, variance analysis, performance management and decision-making, working capital and short-term finance, plus business technology, data, economics, sustainability and ethics.

Assessment

Question count not published by the exam provider

Time Limit

2 hours (Next Generation ACA; the legacy Management Information exam was 1.5 hours)

Passing Score

55%

Exam Fee

Per-exam Certificate Level entry fee set by ICAEW; confirm the current Business Insight and Performance fee at registration (ICAEW (Institute of Chartered Accountants in England and Wales))

ICAEW ACA Business Insight and Performance Exam Content Outline

~30%

Costing and Pricing

Cost behaviour, high-low estimation, absorption versus marginal costing, overhead absorption and over/under-absorption, activity-based costing, job and process costing, and pricing methods including cost-plus, target costing and market skimming.

~25%

Budgeting, Forecasting and Variance Analysis

Functional and cash budgets, fixed and flexible budgeting, zero-based, incremental and rolling budgets, behavioural aspects, time-series and regression forecasting, and material, labour and overhead variances.

~25%

Performance Management and Decision-Making

CVP and breakeven analysis, margin of safety, relevant costing, make-or-buy and special-order decisions, limiting-factor analysis, investment appraisal (payback, NPV, IRR), ROI, residual income and the balanced scorecard.

~20%

Working Capital, Short-Term Finance and Business Context

Working capital and the cash operating cycle, receivables, inventory and payables management, short-term finance, ratio analysis, and the merged business technology, data, economics, sustainability and ethics themes.

How to Pass the ICAEW ACA Business Insight and Performance Exam

What You Need to Know

Passing score: 55%
Assessment: Question count not published by the exam provider
Time limit: 2 hours (Next Generation ACA; the legacy Management Information exam was 1.5 hours)
Exam fee: Per-exam Certificate Level entry fee set by ICAEW; confirm the current Business Insight and Performance fee at registration

Keys to Passing

Work through all 100 available questions
Review every answer and explanation
Track weak areas and revisit them
Use our AI tutor for tough concepts

ICAEW ACA Business Insight and Performance Study Tips from Top Performers

1Practise variance calculations until you can reliably split price/rate from usage/efficiency effects under time pressure.

2Memorise the breakeven, margin-of-safety, C/S ratio and target-profit formulas; CVP questions are common and quick marks.

3Learn the difference between marginal and absorption profit and why inventory movements drive the gap.

4Drill relevant costing rules: ignore sunk costs, include opportunity costs, and use replacement cost for materials in regular use.

5Prepare for the scenario question by working full mini-cases across costing, budgeting, performance and decision-making.

6Do not neglect the business technology, data, economics, sustainability and ethics content carried over from the retired module.

Frequently Asked Questions

What is the ICAEW Business Insight and Performance exam?

Business Insight and Performance (BIP) is a Next Generation ACA Certificate Level module. It replaced the Management Information exam and incorporated elements of the retired Business Technology and Finance module, covering management accounting, performance and the business context.

What is the pass mark for Business Insight and Performance?

The pass mark is 55%. It is a computer-based objective test combining multiple-choice, multi-part and multiple-response questions with numerical entry, plus one scenario-based question worth 20% of the marks.

How long is the Business Insight and Performance exam?

Under the Next Generation ACA, Business Insight and Performance is a 2-hour exam. The legacy Management Information exam that it replaced was 1.5 hours, so always check the current ICAEW exam guide for confirmation.

What topics are tested in Business Insight and Performance?

The syllabus covers costing and pricing, budgeting and forecasting with variance analysis, performance management and decision-making, and working capital and short-term finance, alongside business technology, data analysis, economics, sustainability and ethics.

Does Business Insight and Performance replace Management Information?

Yes. In the Next Generation ACA, Business Insight and Performance replaced the Management Information module and merged in selected content from the retired Business Technology and Finance module, broadening it beyond pure management accounting.

Is there a scenario-based question in the BIP exam?

Yes. ICAEW states that one scenario-based question, drawn from costing and pricing, budgeting and forecasting, performance management or management decision-making, carries 20% of the marks, with the remainder from objective-test questions.