Acca F5 Performance Management 2011

ACCA Paper F5 Performance Management Class Notes June 2012 © Interactive World Wide Ltd, December 2011 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of Interactive World Wide Ltd. 2 www.studyinteractive.org Contents PAGE INTRODUCTION TO THE PAPER 5 FORMULAE PROVIDED IN THE EXAMINATION PAPER 7 CHAPTER 1: COST ACCOUNTING AND NEW DEVELOPMENTS 9 CHAPTER 2: DECISION MAKING AND LINEAR PROGRAMMING 31 CHAPTER 3: PRICING 57 CHAPTER 4: DECISION MAKING UNDER UNCERTAINTY 71 CHAPTER 5: BUDGETING TYPES 85 CHAPTER 6: BUDGETARY CONTROL 95 CHAPTER 7: QUANTITATIVE AIDS TO BUDGETING 107 CHAPTER 8: STANDARD COSTING AND VARIANCE ANALYSIS 125 CHAPTER 9: ADVANCED VARIANCE ANALYSIS 141 CHAPTER 10: PERFORMANCE EVALUATION 155 CHAPTER 11: TRANSFER PRICING 175 SOLUTIONS TO EXERCISES AND EXAMPLES 183 ACCA STUDY GUIDE AND INDEX 235 www.studyinteractive.org 3 4 www.studyinteractive.org Introduction to the paper www.studyinteractive.org 5 IN TR O DUC T IO N T O T H E PA P ER AIM OF THE PAPER To develop knowledge and skills in the application of management accounting techniques to quantitative and qualitative information for planning, decisionmaking, performance evaluation and control. OUTLINE OF THE SYLLABUS 1. Cost accounting techniques. 2. Decision-making techniques including risk and uncertainty. 3. Budgeting techniques and methods. 4. Standard costing systems. 5. Performance appraisal including financial and non-financial measures. FORMAT OF THE EXAM PAPER The syllabus is assessed by a three hour paper-based examination. The examination consists of 5 questions of 20 marks each. compulsory. All questions are FAQs What is the skills set that a student must bring to the paper? As a student approaching this paper the basic requirement is an ability to understand and compute the differing techniques and methods in the syllabus. In addition there is a need to understand the scenario and critically be able to write in relation to the scenario and whatever the numbers you have already calculated. What impact will there be of having a new examiner on this paper? Ann Irons is the new examiner of paper F5. There should be little or no impact of having a new examiner on the well prepared student. The style and content of the questions will change to some degree but the new examiner is given the same remit as the previous examiner. What is an average mix of discursive and numerical elements in the exam? There is no strict guideline as to how many marks would be allocated to discursive parts and number crunching questions. However, on average around 35% - 40% is general average covering discussions based on scenarios provided in the questions, and some on general concepts. 6 www.studyinteractive.org Formulae provided in the examination paper www.studyinteractive.org 7 F OR MU LA E & T A