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100+ Free ICAEW ACA Business Insight and Performance Practice Questions

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A company drops a product that shows a loss after charging apportioned fixed overheads. If those fixed overheads are unavoidable, dropping the product will most likely:

A
B
C
D
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2026 Statistics

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 Practice Questions

Verified exam format metadata for ICAEW ACA Certificate Level - Business Insight and Performance is pending. The practice questions above remain available while official exam length, timing, passing score, fee, and administrator details are reviewed.