Relevant to candidates sitting Performance Management from September 2019 The aim of the Performance Management exam is to develop knowledge and particularly skills in the application of management accounting techniques to quantitative and qualitative information for planning, decision making, performance evaluation, and control. Syllabus structure, rationale and relational diagram Relationship between MA, PM and APM examsThe…
Relevant to F1, F5, F7, F8, P2, P3 and P5 The term ‘charity’ refers to the practice of benevolent giving. Charities are established for general or specific philanthropic purposes. They are one type of not‑for‑profit organisation, but with several additional distinguishing features: they exist entirely to benefit defined groups in society as their purposes are…
Relevant to F1, F5, F7, F8, P2, P3 and P5 Several exams in the ACCA Qualification may feature questions on not-for‑profit organisations. Although many of the principles of management and organisation apply to most business models, not-for-profit organisations have numerous features that distinguish them from the profit maximising organisations often assumed in conventional economic theory….
Some tips to help alleviate students’ fears of variance analysis Since long ago, variance analysis has been an area that evokes fear in students worldwide. Students enter the exam hall, desperately running through the formulae used to calculate all the different variances, fearful of forgetting them before they have managed to put pen to paper….
The purpose of this article is twofold: first, it is to summarise the history of the learning curve effect and help candidates understand why it is important. Second, it is to look at what past learning curve questions have required of candidates and to clarify how future questions may go beyond this. A brief history…
This article critically evaluates the two main methods for preparing budgets – the incremental approach and the zero-based approach. The budgeting process is an essential component of management control systems, as it provides a system of planning, coordination and control for management. It is often an arduous process, however, and often strikes dread in the…
This article provides a step-by-step approach to decision trees, using a simple example to guide you through. There is no universal set of symbols used when drawing a decision tree but the most common ones that we tend to come across in accountancy education are squares (□), which are used to represent ‘decisions’ and circles…
This article introduces the concepts of risk and uncertainty together with the use of probabilities in calculating both expected values and measures of dispersion. Relevant to MA, PM, AFM and APM Clearly, risk permeates most aspects of corporate decision-making (and life in general), and few can predict with any precision what the future holds in…
Decision making is an important aspect of the Performance Management syllabus, and questions on this topic will be common. The range of possible questions is considerable, but this article will focus on only one: linear programming The ideas presented in this article are based on a simple example. Suppose a profit-seeking firm has two constraints:…
Cost-volume-profit analysis looks primarily at the effects of differing levels of activity on the financial results of a business In any business, or, indeed, in life in general, hindsight is a beautiful thing. If only we could look into a crystal ball and find out exactly how many customers were going to buy our product,…
Environmental management accounting is part of the Performance Management syllabus and requires students to describe the issues businesses face in managing environmental costs, and the different methods they may use to account for these. A member of the Performance Management examining team provides students with an introduction to environmental management accounting The two requirements of…
A follow-up to the first part of this article featuring a discussion on the five focusing steps of the theory of constraints, with examples of how these steps might be applied in practice or in the exam. In the previous article, a member of the Performance Management examining team revealed all about The Goal, the book…
A member of the Performance Management examining team shares her latest read and how it changed her views on throughput accounting and the theory of constraints. I’ve just finished reading a book. It was the type of book that you pick up and you cannot put down (other than to perform the mandatory tasks that…
Target costing and lifecycle costing can be regarded as relatively modern advances in management accounting, so it is worth first looking at the approach taken by conventional costing. Typically, conventional costing attempts to work out the cost of producing an item incorporating the costs of resources that are currently used or consumed. Therefore, for each…
ABC undoubtedly requires an organisation to spend time and effort investigating more fully what causes it to incur costs, and then to use that detailed information for costing purposes. Conventional costing distinguishes between variable and fixed costs. Typically, it is assumed that variable costs vary with the number of units of output (and that these…
There is no doubt that transfer pricing is an area that candidates find difficult. It’s not surprising, then, that when it was examined in June 2014’s Performance Management exam, answers were not always very good. The purpose of this article is to strip transfer pricing back to the basics and consider, first, why transfer pricing…
This article focuses on a classic performance measurement question, which involves a combination of financial and non-financial analysis. Decentralisation is essentially the delegation of decision-making responsibility. All organisations decentralise to some degree; some do it more than others. Decentralisation is a necessary response to the increasing complexity of the environment that organisations face and the…
Performance management—the processes that ensure organisations meet their objectives—is core to the Performance Management syllabus, and understanding modern performance measurement systems is an important area within this topic. Performance Management students should already be familiar with Kaplan & Norton’s Balanced Scorecard which is a regularly examined topic and one of the foundations of modern performance…
Performance evaluation is a regularly examined requirement in the F5 Performance Management exam, and is a topic that students tend to misunderstand and struggle with. Often examined as a full, 20 mark requirement, the task of crafting a free-form answer that incorporates both supporting calculations and a developed, written discussion is a daunting task. It’s…
Information systems (IS) is a topic you need to be ready for in all sections of the Performance Management exam. The examiner reports state that students regularly overlook this area of the syllabus, so make sure you cover it during your studies. Information systems (IS) are critical for Performance Management (PM). Information systems greatly aid…
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