ExpertMedium2 marksMultiple Choice
ACCA · Question 5 · Specialist cost and management accounting techniques
Section A
A chemical manufacturing company is implementing Environmental Management Accounting (EMA). They are using a technique that traces the physical movement of materials through the production process, identifying the cost of materials that end up in the final product versus the cost of materials that become waste.
Which EMA technique is being described?
Section A
A chemical manufacturing company is implementing Environmental Management Accounting (EMA). They are using a technique that traces the physical movement of materials through the production process, identifying the cost of materials that end up in the final product versus the cost of materials that become waste.
Which EMA technique is being described?
Answer options:
A.
Input-output analysis
B.
Flow cost accounting
C.
Material flow cost accounting
D.
Life-cycle costing
How to approach this question
Identify the technique that focuses on the physical flow of materials and categorizes them into 'good' product and 'non-product' (waste).
Full Answer
C.Material flow cost accounting✓ Correct
Material Flow Cost Accounting (MFCA) is an EMA technique that traces the physical flow of materials through a process. It assigns costs to both the materials that become part of the final product and the materials that end up as waste, highlighting the financial cost of inefficiencies.
Common mistakes
Confusing MFCA with Input-output analysis, which is often just a physical mass balance without the detailed cost assignment to waste streams.
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