ACCA F5 - Performance Management Study Text 2016

In addition to ACCA examining team reviewedmaterial you get: A user-friendly format for easy navigation Exam focus points describing what the examiningteam will want you to do Regular Fast Forward summaries emphasising thekey points in each chapter Questions and quick quizzes to test yourunderstanding A practice question bank containing examstandard questions with answers A full index All you need in one bookStudy TextPaper F5Performance ManagementThis ACCA Study Text for Paper F5 PerformanceManagement has been comprehensively reviewed bythe ACCA examining team. This review guaranteesappropriate depth and breadth of content andcomprehensive syllabus coverage.Performance ManagementBPP Learning Media is dedicated to supporting aspiring business professionalswith top-quality learning material as they study for demanding professionalexams, often whilst working full time. BPP Learning Media’s commitmentto student success is shown by our record of quality, innovation and marketleadership in paper-based and e-learning materials. BPP Learning Media’s studymaterials are written by professionally qualified specialists who know frompersonal experience the importance of top-quality materials for exam success.ACCA F5ACCA approved content providerACCA APPROVEDCONTENT PROVIDERACCA ApprovedStudy TextBPP House142-144 Uxbridge RoadLondon W12 8AAUnited KingdomT 0845 075 1100 (UK)T 44 (0)20 8740 2211 (Overseas)E Learningmedia@bpp.combpp.com/learningmediaFebruary 2016 32.00ACF5ST16 (RICOH).indd 1-3For exams in September 2016, December2016, March 2017 and June 2017Contact usPaper F5Performance ManagementValid for bothpaper andcomputer basedexamsFor exams in September 2016, December2016, March 2017 and June 201705/02/2016 16:03

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STUDYPAPER F5PERFORMANCE MANAGEMENTBPP Learning Media is an ACCA Approved Content Provider. This means we workclosely with ACCA to ensure this Study Text contains the information you need to passyour exam.In this Study Text which has been reviewed by the ACCA examination team we: Highlight the most important elements in the syllabus and the key skills you will need Signpost how each chapter links to the syllabus and the Study Guide Provide lots of exam focus points demonstrating what is expected of you in the exam Emphasise key points in regular fast forward summaries Test your knowledge in quick quizzes Examine your understanding in our practice question bank Reference all the important topics in our full indexBPP's Practice & Revision Kit also supports this paper.FOR EXAMS IN SEPTEMBER 2016, DECEMBER2016, MARCH 2017 AND JUNE 2017TEXT

First edition 2007Ninth edition February 2016ISBN 9781 4727 4422 7(Previous ISBN 9781 4727 2675 9)e-ISBN 9781 4727 4664 1British Library Cataloguing-in-Publication DataA catalogue record for this bookis available from the British LibraryPublished byBPP Learning Media LtdBPP House, Aldine PlaceLondon W12 8AAwww.bpp.com/learningmediaPrinted in the United Kingdom byRICOH UK LimitedUnit 2Wells PlaceMersthamRH1 3LGYour learning materials, published by BPP LearningMedia Ltd, are printed on paper obtained fromtraceable sustainable sources.All rights reserved. No part of this publication may be reproduced,stored in a retrieval system or transmitted, in any form or by anymeans, electronic, mechanical, photocopying, recording orotherwise, without the prior written permission of BPP LearningMedia Ltd.We are grateful to the Association of Chartered CertifiedAccountants for permission to reproduce past examinationquestions. The suggested solutions in the practice answer bankhave been prepared by BPP Learning Media Ltd, unless otherwisestated. BPP Learning Media Ltd2016iiIntroductionA note about copyrightDear CustomerWhat does the little mean and why does it matter?Your market-leading BPP books, course materials and e-learningmaterials do not write and update themselves. People write them ontheir own behalf or as employees of an organisation that invests inthis activity. Copyright law protects their livelihoods. It does so bycreating rights over the use of the content.Breach of copyright is a form of theft – as well as being a criminaloffence in some jurisdictions, it is potentially a serious breach ofprofessional ethics.With current technology, things might seem a bit hazy but,basically, without the express permission of BPP Learning Media: Photocopying our materials is a breach of copyright Scanning, ripcasting or conversion of our digital materialsinto different file formats, uploading them to facebook or emailing them to your friends is a breach of copyrightYou can, of course, sell your books, in the form in which you havebought them – once you have finished with them. (Is this fair toyour fellow students? We update for a reason.) Please note the eproducts are sold on a single user licence basis: we do not supply'unlock' codes to people who have bought them secondhand.And what about outside the UK? BPP Learning Media strives tomake our materials available at prices students can afford by localprinting arrangements, pricing policies and partnerships which areclearly listed on our website. A tiny minority ignore this and indulgein criminal activity by illegally photocopying our material orsupporting organisations that do. If they act illegally and unethicallyin one area, can you really trust them?

ContentsPageIntroductionHelping you to passStudying F5The exam paper and exam formulaeSyllabus and Study GuidevviiviiiixPart A Specialist cost and management accounting techniques12a2b2c2d2eCostingActivity based costingTarget costingLife cycle costingThroughput accountingEnvironmental accounting31931394965Part B Decision-making techniques34567Cost volume profit (CVP) analysisLimiting factor analysisPricing decisionsShort-term decisionsRisk and uncertainty77101127163183Part C Budgeting and control8910111213Budgetary systemsQuantitative analysis in budgetingBudgeting and standard costingVariance analysisPlanning and operational variancesPerformance analysis and behavioural aspects217247267287311327Part D Performance measurement and control1415161718Performance management information systemsSources of management information and management reportsPerformance measurement in private sector organisationsDivisional performance and transfer pricingFurther aspects of performance managementPractice question bankPractice answer bankIndex345363381411433449479533Review formContentsiii

ivIntroduction

Helping you to passBPP Learning Media – ACCA Approved Content ProviderAs an ACCA Approved Content Provider, BPP Learning Media gives you the opportunity to use studymaterials reviewed by the ACCA examination team. By incorporating the examination team's commentsand suggestions regarding the depth and breadth of syllabus coverage, the BPP Learning Media StudyText provides excellent, ACCA-approved support for your studies.The PER alertBefore you can qualify as an ACCA member, you not only have to pass all your exams but also fulfil a threeyear practical experience requirement (PER). To help you to recognise areas of the syllabus that youmight be able to apply in the workplace to achieve different performance objectives, we have introducedthe 'PER alert' feature. You will find this feature throughout the Study Text to remind you that what youare learning to pass your ACCA exams is equally useful to the fulfilment of the PER requirement.Your achievement of the PER should now be recorded in your online My Experience record.Tackling studyingStudying can be a daunting prospect, particularly when you have lots of other commitments. The differentfeatures of the Study Text, the purposes of which are explained fully on the Chapter features page, willhelp you whilst studying and improve your chances of exam success.Developing exam awarenessOur Study Texts are completely focused on helping you pass your exam.Our advice on Studying F5 outlines the content of the paper, the necessary skills you are expected to beable to demonstrate and any brought forward knowledge you are expected to have.Exam focus points are included within the chapters to highlight when and how specific topics wereexamined, or how they might be examined in the future.Using the Syllabus and Study GuideYou can find the syllabus and Study Guide on pages ix - xvii of this Study Text.Testing what you can doTesting yourself helps you develop the skills you need to pass the exam and also confirms that you canrecall what you have learnt.We include Questions – lots of them – both within chapters and in the Practice Question Bank, as well asQuick Quizzes at the end of each chapter to test your knowledge of the chapter content.Introductionv

Chapter featuresEach chapter contains a number of helpful features to guide you through each topic.Topic listTopic listSyllabus referenceWhat you will be studying in this chapter and the relevantsection numbers, together with ACCA syllabus references.IntroductionPuts the chapter content in the context of the syllabus asa whole.Study GuideLinks the chapter content with ACCA guidance.Exam GuideHighlights how examinable the chapter content is likely tobe and the ways in which it could be examined.Knowledge brought forward from earlier studiesWhat you are assumed to know from previousstudies/exams.FAST FORWARDSummarises the content of main chapter headings,allowing you to preview and review each section easily.ExamplesDemonstrate how to apply key knowledge andtechniques.Key termsDefinitions of important concepts that can often earn youeasy marks in exams.Exam focus pointsWhen and how specific topics were examined, or howthey may be examined in the future.Formula to learnFormulae that are not given in the exam but which have tobe learnt.Gives you a useful indication of syllabus areas thatclosely relate to performance objectives in your PracticalExperience Requirement (PER).viIntroductionQuestionGives you essential practice of techniques covered in thechapter.Case StudyReal world examples of theories and techniques.Chapter RoundupA full list of the Fast Forwards included in the chapter,providing an easy source of review.Quick QuizA quick test of your knowledge of the main topics in thechapter.Practice Question BankFound at the back of the Study Text with morecomprehensive chapter questions. Cross referenced foreasy navigation.