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CAF-5 Management Accounting · Spring 2026

Q1: Multiple-choice questions

10 marksMCQPass rate 47%

Seven MCQs (10 marks) on product cost elements, the abnormal loss entry, safety stock, CVP assumptions, a learning curve total, landed cost of an import and NRV-based joint cost allocation.

Areas: (i) Cost classification and manufacturing accounts (1) · (ii) Process costing (1) · (iii) EOQ, safety stock and reorder levels (1) · (iv) Cost-volume-profit analysis (1) · (v) Labour costing and learning curve (1.5) · (vi) Inventory valuation (2) · (vii) Joint and by-products (2.5)

Read the question first

We don't reproduce ICAP's question. Open it in the official PDF, attempt it, then use this walkthrough.

Q1 in the official paper (p. 1) Official suggested answer Suggested answers and marking plans sit in ICAP's student area (CRN login required).Examiners' comments on Q1

How to approach it

  1. Items carry 1 to 2.5 marks: budget roughly 2 minutes per mark and do the higher-mark calculations carefully on the rough page.
  2. For learning curves, compute the cumulative average time for the total units, then multiply by the units.
  3. For joint products, check whether any product is processed further before split-off values are used.

Key rules to apply

  • Learning curve: cumulative average time per unit = time for first unit × (cumulative units)^b, where b = log(learning rate) ÷ log 2.
  • Landed cost includes purchase price, non-refundable duties and inward freight; adjustable (refundable) taxes are excluded.
  • NRV at split-off for a product processed further = final sales value − further processing costs.
  • Abnormal losses are valued like good output and written off to profit or loss.

Common mistakes

Drawn from the examiners' comments for this sitting (summarised in our words) and from typical errors on this topic.

  • Multiplying the first-unit time by the learning rate per unit rather than applying the doubling rule.
  • Loading an adjustable income tax into inventory cost.
  • Allocating joint costs on final sales value when a product is processed further.

Similar question with worked solution

Written by us with our own numbers; it tests the same skills as Q1 without copying it.

Original practice question

Learning curve total

The first unit of a new product takes 50 labour hours. An 85% learning curve applies (b = −0.2345).

Required: Calculate the total hours for the first 20 units.

Worked solution

WorkingValue
Cumulative average time: 50 × 20^−0.234524.77 hours
Total for 20 units: 24.77 × 20495.4 hours

Answer: About 495 hours (versus 1,000 hours with no learning).

Keep practising

Chapter MCQsCost classification and manufacturing accountsChapter MCQsProcess costingChapter MCQsEOQ, safety stock and reorder levelsChapter MCQsCost-volume-profit analysisChapter MCQsLabour costing and learning curveChapter MCQsInventory valuationChapter MCQsJoint and by-productsTopical indexCAF-5 topic × sitting matrixSitting analysisCAF-5 Spring 2026

← All questions in CAF-5 Spring 2026