Performance Management (PM)
150 questions mapped to the official ACCA PM syllabus (S26-J27). Covers specialist costing, decision-making, budgeting and divisional performance. Filter by section, work at your own pace, see explanations for every answer, or switch to Exam Sim mode for a timed PM mock exam under real exam conditions.
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The PM exam format
3 hours, 100 marks in total. All questions are compulsory. The pass mark is 50%.
| Section A | 15 objective test questions worth 2 marks each | 30 marks |
|---|---|---|
| Section B | 3 case questions, each with 5 objective test questions worth 2 marks | 30 marks |
| Section C | 2 constructed response questions worth 20 marks each | 40 marks |
Source: the official ACCA syllabus and study guide for this paper. Always check the current version on the ACCA website before you sit.
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Three questions from this bank, each with its answer and worked explanation. The quiz above draws from all 150.
A company is deciding whether to accept a special order. Which of the following costs is NOT relevant to this decision?
- The additional direct materials that would be purchased specifically for the order
- The original cost of machinery purchased three years ago that will be used on the order
- The contribution forgone from normal production that would be displaced by the order
- Additional overtime wages that would be incurred if the order is accepted
Show answer and explanation
Answer: B. Relevant costs are future, incremental cash flows that differ between decision alternatives. The original cost of machinery (A) is a sunk cost — it was paid in the past and cannot be recovered regardless of the decision. Sunk costs are always irrelevant. Additional materials (B) are relevant — they are a future incremental cost. Contribution forgone (C) is relevant — it is an opportunity cost (the benefit sacrificed). Overtime wages (D) are relevant — they are additional future costs that arise only if the order is accepted.
A company produces two products using traditional absorption costing based on machine hours. Product A uses many machine hours but requires few quality inspections. Product B uses few machine hours but requires many quality inspections. Compared to ABC, how would traditional absorption costing treat these products?
- Product A is over-costed and Product B is under-costed, because traditional costing assigns overhead in proportion to machine hours regardless of inspection activity
- Product A is under-costed and Product B is over-costed, because ABC recognises that inspections drive more overhead
- Both products are costed identically under both methods as total overheads are the same
- Traditional absorption costing always produces higher unit costs than ABC for high-volume products
Show answer and explanation
Answer: A. Traditional absorption using machine hours assigns costs in proportion to machine hours. Product A (high machine hours) absorbs large overhead; Product B (low machine hours) absorbs little — regardless of how many inspections each requires. ABC would assign inspection costs based on actual inspection usage: Product B (many inspections) would absorb more inspection overhead. So traditional costing over-costs A (too much overhead assigned) and under-costs B (too little assigned). This cross-subsidisation is the core problem ABC solves. Option B reverses the direction. Options C and D are incorrect.
Which of the following best describes how budgetary systems fit within an organisation's performance hierarchy?
- Budgets replace strategic planning by providing a detailed annual framework for all decisions
- Budgets are purely financial documents with no connection to non-financial strategic objectives
- Budgets translate strategic objectives into operational targets, linking long-term plans to short-term performance management
- Budgetary systems are only relevant at the operational level and have no connection to strategy
Show answer and explanation
Answer: C. Budgets sit at the interface of strategic and operational management — they convert long-term strategic objectives (e.g. grow market share by 15%) into short-term quantified targets (e.g. achieve sales of £X in Q1) that can be monitored and managed. They cascade from the strategic level (board objectives) through tactical (divisional plans) to operational (departmental targets). They do not replace strategic planning (A) — they implement it. Modern budgeting includes non-financial measures (B is wrong). They connect strategy to operations across all levels (D is wrong).
About this question bank
150 questions across 5 syllabus sections, each mapped to a reference in the official ACCA syllabus for PM and each with a worked explanation. 112 are multiple choice and 38 are numerical, where you work the answer out before choosing it.
- Written to the ACCA syllabus and study guide for exams from September 2026 to June 2027.
- Spotted a mistake? Report it and it will be corrected.
| Syllabus section | Questions |
|---|---|
| A: Information systems & data analytics | 18 |
| B: Specialist costing | 34 |
| C: Decision-making | 36 |
| D: Budgeting & control | 31 |
| E: Performance measurement | 31 |