ExpertMedium2 marksMultiple Choice
Specialist Cost and Management Accounting TechniquesEnvironmental Management AccountingSpecialist CostingSyllabus Area B
ACCA · Question 06 · Specialist Cost and Management Accounting Techniques
Section A
ChemCorp, a heavy chemical manufacturer, is implementing Environmental Management Accounting (EMA). They are using the 'Input/Output analysis' method.
What is the fundamental principle behind Input/Output analysis in EMA?
Section A
ChemCorp, a heavy chemical manufacturer, is implementing Environmental Management Accounting (EMA). They are using the 'Input/Output analysis' method.
What is the fundamental principle behind Input/Output analysis in EMA?
Answer options:
A.
Environmental costs are allocated based on the number of output units produced.
B.
What goes in must come out; therefore, any material input that does not end up in the final product is considered waste.
C.
It separates environmental costs into prevention, appraisal, internal failure, and external failure costs.
D.
It focuses solely on the monetary value of outputs sold to the external market.
How to approach this question
Recall the definition of Input/Output analysis in EMA, which is based on the physical law of conservation of mass.
Full Answer
B.What goes in must come out; therefore, any material input that does not end up in the final product is considered waste.✓ Correct
Input/Output analysis in EMA is based on the principle of mass balance. It assumes that 100% of inputs must be accounted for in outputs. If the physical weight/volume of the final product is less than the inputs, the difference represents waste, emissions, or effluent, which carry environmental costs.
Common mistakes
Confusing Input/Output analysis with Environmental Quality Costing (prevention/appraisal/failure).
Practice the full ACCA PM — Performance Management Practice Exam 5
32 questions · hints · full answers · grading
More questions from this exam
Q01Section A
AgriDrone Analytics provides smart-farming solutions using autonomous drones that capt...EasyQ02Section A
MetroWater is a public utility managing a city's water grid. It operates as an 'open s...MediumQ03Section A
FinSecure is a cross-border fintech startup processing micro-loans. To ensure the inte...MediumQ04Section A
OmniVision, a tech startup, is developing a new virtual reality (VR) headset. The comp...EasyQ05Section A
CarePlus is a specialized private hospital shifting from traditional absorption costin...Easy