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MA – Cost Units

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › MA – Cost Units

  • This topic has 1 reply, 2 voices, and was last updated 2 years ago by John Moffat.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • March 18, 2023 at 10:07 am #681489
    AntKhazmi
    Participant
    • Topics: 1
    • Replies: 0
    • ☆

    Hi John,

    Currently studying for my MA exam and a newcomer to OpenTuition. I came across this question and I was not really able to understand the full reasoning behind it. The question was this:

    Which of the following would be the most suitable cost unit for a bus company?
    A. a Passenger – Journey
    B. a Seat on a Bus (I assumed it is this as it is very unlikely that all the seats would be occupied in one journey)
    C. a Passenger – Mile (correct answer)
    D. a Bus

    Looking forward to hearing from you.
    Many Thanks,
    Anthony

    March 19, 2023 at 9:20 am #681516
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    The reason that they want to know the costs is partly going to be because of deciding how much they will charge passengers.

    Given that the longer the journey the more it costs them (and therefore the more they are likely to charge) then of the options available, the cost per passenger mile would seem to be the most suitable.

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