ACCA P5 Exam Tips by LSBF
Performance measurement and performance appraisal for profit-seeking organisation.
Identify the strategic objectives, CSF, KPI and changes in PESTEL factors and comment on the suitability of appraisal techniques and KPIs suggested and recommend appropriate changes.
Benchmarking competitor firms may be part of the case scenario. Possibly, the difficulties of performance measure may will examined.
Use both financial ratios (such as EPS, ROCE, ROI, RI and EVA) and non-financial performance indicators (NFPI) on quality and efficiency to give a comprehensive performance measurement and suggestion for improvement.
So be familiar with the adjustments to CE and PAT when calculating EVA.
Performance measurement models such as balanced scorecard (4 Perspectives), building block model (dimensions, standards and rewards) for service provider and the performance pyramid.
Strategic planning models such as Porter’s 5 Forces, Ansoff Product-Market Matrix and BCG Matrix.
Apply McKinsey’s 7S model for implementing effective change by listing the hard and soft elements.
The case scenario may test staff appraisal, reward system, human resource management and behavioural aspects in performance measurement and to identify and overcome dysfunctional behaviours. This area of the P5 syllabus may be linked to budgets (see below).
Budget theory on traditional budgets (fixed & incremental budget), beyond budgeting (rolling budget + NFPI) by Hope and Fraser and the use of other modern budgeting methods such as ZBB and ABB.
Transfer pricing between divisions, suggest optimal transfer price, calculate the total profit of the entire organisation and comment on the impact of changing the existing transfer prices.
Change the existing absorption costing (AC) to activity-based costing (ABC) and activity-based management (ABM) with the introduction of information system.
Improve quality at the organisation using TQM, Six Sigma (DMAIC), Kaizen and JIT.
Identify quality cost – conformance cost: prevention cost, appraisal cost; non-conformance cost: internal failure cost, external failure cost. The case may include opportunity cost of poor image and reputation.
Risk appetite and expected value in decision making in uncertainty. More than one topic would appear in one exam question.