ACCA Applied Knowledge · Management Accounting · Spreadsheets

A management accountant builds a budget model in a spreadsheet. Selling price per unit, variable cost per unit and annual fixed costs are typed into separate labelled cells, and every calculation refers to those cells instead of containing typed numbers. Which is the main benefit of this design?

The main benefit is that assumptions such as price, variable cost and fixed costs can be altered in a single cell and every formula referring to it updates automatically. This supports what-if analysis and reduces errors, though it does not remove the need for review or provide protection.

1. AAssumptions can be changed in one place and all results update automaticallyCorrect
2. BThe spreadsheet will no longer need to be checked for errors
3. CThe workbook file will always be smaller in size
4. DFormulas will automatically be protected from unauthorised changes