CA Final SCMPE Case Study Questions 2027: Practice Cases with Answers and Solutions
Strategic Cost Management and Performance Evaluation (SCMPE) is a subject where understanding a concept is only the beginning. The real challenge is applying that concept when a business faces a practical problem.
A question may describe a manufacturing company dealing with rising costs, a service business struggling with customer complaints or a manager deciding whether to manufacture a component internally or purchase it from an outside supplier. You need to identify the issue, select the appropriate technique, interpret the figures and recommend a sensible course of action.
That is why practising CA Final SCMPE case study questions is an important part of preparation. Reading theory helps you understand concepts, but solving case studies trains you to connect those concepts with business decisions.
This guide provides original practice case studies, step-by-step solutions, key formulas and a practical revision strategy for students preparing for the 2027 examination cycle. The examples are designed for learning and are not reproduced from an ICAI examination paper.
Before using any practice material, check the syllabus, study material and examination guidance applicable to your attempt on the official ICAI website.
What Are CA Final SCMPE Case Study Questions?
SCMPE case study questions present a business situation and ask you to analyse the information, calculate relevant figures, compare alternatives or recommend a decision.
Instead of asking only for a definition, a case study may require you to apply several concepts to the same situation.
For example, a company might be facing all three of these problems:
- Its production costs are increasing.
- Customer complaints about product quality are rising.
- Management wants to improve profitability without increasing selling prices.
A strong answer would not simply define cost reduction or total quality management. It would identify the causes of the problem and explain which measures could improve cost, quality and performance.
ICAI’s official SCMPE skill-assessment material emphasises answering according to the requirement verb. For instance, calculate, analyse, evaluate and recommend call for different approaches. A recommendation should consider reasonable alternatives, assess them and reach a justified conclusion.
Important SCMPE Topics to Practise Through Case Studies
The official SCMPE paper outline covers strategic cost management, decision-making, performance evaluation, managerial control and case studies. The exact material applicable to your attempt should always be verified with ICAI.
The following table can help you organise practice.
| Topic | What a case study may require |
| Cost-Volume-Profit Analysis | Break-even point, target profit and contribution |
| Relevant Costing | Make-or-buy and special-order decisions |
| Pricing Decisions | Selecting a suitable price under given conditions |
| Target Costing | Finding the allowable cost to achieve a target profit |
| Lean Systems | Reducing waste and improving workflow |
| Theory of Constraints | Improving contribution through a bottleneck |
| Balanced Scorecard | Evaluating financial and non-financial performance |
| Transfer Pricing | Comparing divisional and company-wide outcomes |
| Budgetary Control | Analysing deviations and recommending corrective action |
| Standard Costing | Calculating and interpreting variances |
| Life Cycle Costing | Considering costs across a product’s life |
| Quality Management | Assessing prevention, appraisal and failure costs |
Do not treat this list as a prediction of which chapters will appear in 2027. Use it as a framework for balanced practice.
Case Study 1: Make-or-Buy Decision
Topic: Relevant Costing and Strategic Decision-Making
Case
Nova Appliances Ltd. manufactures a component used in one of its products. The company currently produces 20,000 units of the component annually.
The cost details per unit are:
| Particulars | Cost per unit |
| Direct material | ₹80 |
| Direct labour | ₹50 |
| Variable production overhead | ₹20 |
| Fixed production overhead allocated | ₹30 |
| Total reported cost | ₹180 |
An external supplier has offered to provide the component for ₹165 per unit. If the company purchases the component, ₹3,00,000 of annual fixed overhead can be avoided. The remaining fixed overhead will continue regardless of the decision.
Management wants to know whether the company should manufacture or purchase the component.
Questions
- Calculate the relevant cost of manufacturing the component.
- Calculate the annual cost of purchasing it.
- Recommend whether the company should make or buy the component, considering the financial information.
Suggested solution
Step 1: Identify relevant manufacturing costs.
Direct material, direct labour and variable production overhead are relevant if they can be avoided by not manufacturing the component.
Relevant variable cost per unit:
₹80 + ₹50 + ₹20 = ₹150
The allocated fixed overhead of ₹30 per unit should not automatically be included. Only the fixed cost that can actually be avoided is relevant to the decision.
Step 2: Calculate the cost of manufacturing.
Relevant variable cost for 20,000 units:
20,000 × ₹150 = ₹30,00,000
Less: Avoidable fixed overhead = ₹3,00,000
Total relevant cost of making:
₹30,00,000 + ₹3,00,000 = ₹33,00,000
Step 3: Calculate the cost of purchasing.
20,000 × ₹165 = ₹33,00,000
Step 4: Compare the alternatives.
| Particulars | Make | Buy |
| Variable cost / purchase price | ₹30,00,000 | ₹33,00,000 |
| Avoidable fixed overhead | ₹3,00,000 | — |
| Total relevant cost | ₹33,00,000 | ₹33,00,000 |
Recommendation
On the stated financial information, both alternatives have the same relevant cost of ₹33,00,000. Therefore, the company should not make the decision on cost alone.
Management should also assess supplier reliability, quality, delivery schedules, confidentiality, the availability of production capacity and the alternative use of internal facilities. If purchasing releases capacity that can generate additional contribution, that opportunity benefit should also be considered.
Exam takeaway: Allocated fixed cost is not necessarily relevant. Identify which costs actually change between alternatives before making a recommendation.
Case Study 2: Break-Even Analysis and Target Profit
Topic: CVP Analysis and Decision-Making
Case
BrightHome Ltd. sells a home appliance for ₹2,000 per unit. Its variable cost is ₹1,200 per unit, and annual fixed costs are ₹24,00,000.
The management team wants to assess the sales volume required to break even and the sales volume needed to earn a target operating profit of ₹12,00,000.
Questions
- Calculate the contribution per unit.
- Calculate the break-even point in units.
- Calculate the number of units required to earn a profit of ₹12,00,000.
- Explain one limitation of relying only on break-even analysis.
Suggested solution
Step 1: Calculate contribution per unit.
Contribution per unit = Selling price − Variable cost
₹2,000 − ₹1,200 = ₹800
Step 2: Calculate the break-even point.
Break-even units = Fixed costs ÷ Contribution per unit
₹24,00,000 ÷ ₹800 = 30,000 units
At 30,000 units, total contribution equals fixed costs and operating profit is zero, assuming the stated cost and selling-price relationships remain valid.
Step 3: Calculate units for the target profit.
Required units = (Fixed costs + Target profit) ÷ Contribution per unit
= (₹24,00,000 + ₹12,00,000) ÷ ₹800
= ₹36,00,000 ÷ ₹800
= 45,000 units
Summary
| Particulars | Result |
| Selling price per unit | ₹2,000 |
| Variable cost per unit | ₹1,200 |
| Contribution per unit | ₹800 |
| Fixed costs | ₹24,00,000 |
| Break-even volume | 30,000 units |
| Volume for ₹12,00,000 target profit | 45,000 units |
Interpretation
The company must sell 30,000 units to cover the stated costs. To earn the target operating profit of ₹12,00,000, it must sell 45,000 units, assuming the selling price, variable cost per unit and fixed costs remain unchanged.
However, break-even analysis does not automatically account for changes in demand, selling price, product mix, production efficiency or market competition.
Exam takeaway: Do not stop after calculating the answer. Explain what the result means for management and state the assumptions that support it.
Case Study 3: Target Costing and Competitive Pricing
Topic: Cost Management Techniques
Case
Aster Electronics Ltd. plans to launch a new smart device. Market research indicates that customers are willing to pay approximately ₹5,000 per unit. Management wants a profit margin of 20% of the selling price.
The current estimated production and distribution cost is ₹4,300 per unit.
Management needs to determine the target cost and assess the cost reduction required before launching the product.
Questions
- Calculate the target cost per unit.
- Calculate the cost reduction required per unit.
- Suggest practical ways to achieve the target without damaging product quality.
Suggested solution
Step 1: Calculate the target profit.
Target profit = Selling price × Profit margin
₹5,000 × 20% = ₹1,000 per unit
Step 2: Calculate the target cost.
Target cost = Target selling price − Target profit
₹5,000 − ₹1,000 = ₹4,000 per unit
Step 3: Calculate the cost gap.
Current estimated cost = ₹4,300
Target cost = ₹4,000
Required cost reduction = ₹4,300 − ₹4,000 = ₹300 per unit
The company must reduce its estimated cost by ₹300 per unit to achieve the stated target profit margin, assuming the selling price and target margin remain unchanged.
Possible management actions
- Review product design to remove features customers do not value.
- Negotiate supplier prices without compromising material quality.
- Reduce material waste and production rework.
- Improve workflow and equipment utilisation.
- Review packaging and logistics arrangements.
- Use value engineering to find less costly ways of delivering the same required function.
The company should avoid making indiscriminate cuts that reduce reliability or customer satisfaction. A cheaper product that generates more returns or complaints may increase total life-cycle cost.
Exam takeaway: Target costing begins with the market-based selling price and desired profit. The allowable cost is determined from these two figures, not simply by adding a margin to current cost.
Case Study 4: Balanced Scorecard and Performance Evaluation
Topic: Performance Measurement
Case
CarePlus Services Ltd. provides subscription-based home maintenance services. Its financial results have improved, but customer complaints and employee turnover have also increased. Management currently evaluates branch managers mainly on monthly revenue.
The company wants to adopt a Balanced Scorecard to encourage sustainable performance.
Questions
- Explain why revenue alone may not provide a complete measure of performance.
- Suggest suitable measures under the four traditional Balanced Scorecard perspectives.
- Recommend how management should use the scorecard.
Suggested solution
- Why revenue alone is insufficient
Revenue indicates the scale of sales but does not show whether the company is earning adequate profit, retaining customers, delivering reliable service or developing employee capabilities.
A branch could increase revenue by offering excessive discounts, overloading employees or acquiring customers who do not renew their subscriptions. These actions may improve short-term figures while damaging long-term performance.
- Suggested Balanced Scorecard
| Perspective | Possible objective | Example performance measure |
| Financial | Improve profitable growth | Operating margin, revenue growth |
| Customer | Improve service experience | Complaint rate, retention rate, satisfaction score |
| Internal business processes | Improve service delivery | First-time resolution rate, average response time |
| Learning and growth | Build employee capability | Training hours, employee retention, skill assessment |
The measures should be connected to the company’s strategy. For example, if customer retention is a priority, the company should monitor complaint resolution and service quality rather than rewarding sales volume alone.
- Recommendation
CarePlus should establish a balanced set of measurable objectives and review them regularly. Branch managers should understand how their performance is assessed, and the company should avoid creating conflicting incentives.
For instance, rewarding employees only for the number of service calls completed could encourage rushed work. Combining productivity with first-time resolution and customer feedback would provide a more balanced view.
The company should also investigate the reasons behind poor performance rather than treating every unfavourable KPI as an individual employee failure.
Exam takeaway: The Balanced Scorecard connects financial outcomes with customer results, internal processes and organisational learning. It is a strategic performance framework, not merely a collection of unrelated measurements.
How to Solve SCMPE Case Study Questions Effectively
A common mistake is to begin calculating immediately after reading the first few lines. In a lengthy case, that can lead to the wrong formula or an incomplete recommendation.
Use this structured approach instead.
Step 1: Read the requirement first
Identify the action requested. Does the question ask you to calculate, analyse, compare, evaluate or recommend?
The command word determines the depth and format of your answer.
Step 2: Identify the relevant information
Separate useful data from background details that do not affect the particular requirement. In numerical questions, identify the figures, units and assumptions that matter.
Step 3: Select the correct concept
Connect the facts to the appropriate SCMPE technique. For example, a question about avoidable costs may require relevant costing, while a question about the relationship between selling price, volume and profit may require CVP analysis.
Step 4: Show your calculations
Write the formula, substitute the figures and state the result clearly. Include units wherever appropriate.
Step 5: Interpret the result
Explain what the number means for the business. A cost saving, for example, should be distinguished from a change in total profit where other effects may also arise.
Step 6: Give a reasoned recommendation
When asked to recommend an option, compare the alternatives, explain the trade-offs and state your conclusion. Financial results should be considered alongside operational, strategic and ethical factors where relevant.
Common Mistakes to Avoid in SCMPE Practice
| Mistake | How to improve |
| Memorising formulas without understanding them | Practise applying each formula to different situations |
| Including every cost in a decision | Identify relevant and avoidable costs |
| Giving a number without interpretation | Explain the business meaning of the result |
| Ignoring the question’s command word | Match the answer to calculate, analyse, evaluate or recommend |
| Giving a recommendation without comparison | Assess reasonable alternatives before concluding |
| Ignoring non-financial factors | Consider quality, capacity, customer impact and operational risk |
| Spending too long on one case | Practise with a timer and allocate time sensibly |
| Using unverified predicted questions as the only resource | Prioritise official study material, past papers and applicable practice resources |
These habits are worth developing early. Clear reasoning and disciplined presentation make your answers more useful and help you identify gaps in your understanding.
A Seven-Day SCMPE Case Study Practice Plan
If you have already covered the concepts and want to improve application skills, a short daily routine can help.
| Day | Suggested practice |
| Day 1 | CVP analysis and break-even cases |
| Day 2 | Relevant costing and make-or-buy decisions |
| Day 3 | Target costing and pricing decisions |
| Day 4 | Performance measurement and Balanced Scorecard |
| Day 5 | Budgetary control and variance analysis |
| Day 6 | A mixed case involving two or more concepts |
| Day 7 | Timed practice, answer review and error analysis |
This is a sample routine, not a substitute for your full study plan. Adjust it to the chapters you have completed and the time remaining before your examination.
After each practice session, note whether the mistake came from choosing the wrong technique, using the wrong figures, making a calculation error or failing to explain the result. Correcting the cause is more useful than simply reading the solution again.
Where to Find Reliable SCMPE Study Resources
Use official resources to confirm which topics and materials apply to your examination attempt.
- ICAI website: Official ICAI portal
- ICAI Board of Studies: BoS education resources
- Previous papers and practice resources: Look for the relevant SCMPE question papers, suggested answers, revision test papers and mock test papers through ICAI’s official education resources.
Students can also explore learning resources at CA Mentoring Program. Use additional learning material to strengthen your understanding, while checking technical content against the official material prescribed for your attempt.
Conclusion
Preparing for CA Final SCMPE case study questions requires more than remembering formulas. You need to understand the business problem, select the correct technique, process the information accurately and explain what the result means.
The four original cases in this guide cover relevant costing, CVP analysis, target costing and the Balanced Scorecard. Practise them independently before reading the solutions, then review the reasoning behind each answer.
For the 2027 examination cycle, confirm the latest applicable ICAI syllabus and study resources. Use official question papers and suggested answers as part of your revision, and treat practice questions as a way to build skill rather than as guaranteed exam predictions.
Regular practice, clear presentation and thoughtful recommendations can help you become more confident when handling unfamiliar SCMPE scenarios.
