What is the main difference between ABC and traditional costing?

The main difference is how they handle overheads. Traditional costing uses a single, volume-based rate (like labour hours), while ABC uses multiple cost drivers based on different activities, providing a more accurate product cost.

Is Activity Based Costing likely to be in my PM exam?

Yes, ABC is a frequently examined topic in Performance Management because it directly tests your ability to apply more complex costing techniques and analyse the results, a core part of the syllabus.

How many marks is an ABC question typically worth?

An ABC question, or a question with an ABC component, is typically worth between 10 and 20 marks, making it a significant part of your exam if it appears.

What if I make a mistake in calculating the cost driver rate?

Examiners often apply the "own figure rule." If you use your incorrect rate correctly in subsequent steps, you will still earn the follow-through marks for demonstrating the right method.

How much time should I spend on an ABC question in the exam?

Based on the standard 1.8 minutes per mark, a 15-mark ABC question should take you approximately 27 minutes. If you are not making progress by this time, it is wise to move on.

Am I ready to answer an ABC question if I can just do the calculation?

Not completely. You also need to be able to discuss the results, such as why the ABC cost differs from a traditional absorption cost and the implications for pricing, profitability analysis, and decision-making.

PM Performance Management

Activity Based Costing (PM): A Complete Guide

A clear guide to Activity Based Costing (ABC) for ACCA PM. Learn the steps, see a worked example, and understand how to score marks in your exam.