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ACCA Question and answers rated A+ 2024/2025 ACCA: APM - General Current Developments In Management Accounting: Total Quality Management - correct answer Main idea: even though quality checks can prevent low quality goods of reaching customers, there will a lot of waste, hence it's important t...

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  • October 3, 2024
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ACCA: APM - General
Current Developments In Management Accounting: Total Quality
Management - correct answer ✔Main idea: even though quality checks can
prevent low quality goods of reaching customers, there will a lot of waste,
hence it's important to control quality at every step or every process within the
organisation


Key points:
1. Every process has an identified process owner
2. Every person in an entity operates within a process and contributes to its
improvement
3. The implementation of TQM is never really complete and there is a culture
within the organisation of continually achieving improvements.


Current Developments In Management Accounting: Six Sigma - correct
answer ✔Operate in 4 key steps:
1. Define - what is mean by quality;
2. Measure - devise ways to measure quality (e.g. customer surveys)
3. Analyse - investigate why current performance falls short;
4. Improve


All steps shall be repeated until improvement is achieved


Current Developments In Management Accounting: Life-cycle costing (+4
main points) - correct answer ✔Main idea: Conventional costing records
costs only as they are incurred, but recording those costs is different to
controlling those costs and performance management depends on cost
control, not cost measurement. Many costs in the manufacturing phase can
only be controlled by what happened

,in the design phase.


Key points:
1) All costs should be taken into account when working out the cost of a unit
and its profitability.
2) Attention to all costs will help to reduce the cost per unit and will help an
organisation achieve its target cost.
3) Many costs will be linked. For example, more attention to design can
reduce manufacturing and warranty costs. More attention to training can
reduce machine maintenance costs. More attention to waste disposal during
manufacturing can reduce end-of life costs.
4) Costs are committed and incurred at very different times. A committed cost
is a cost that will be incurred in the future because of decisions that have
already been made. Costs are incurred only when a resource is used.


Current Developments In Management Accounting: Just in Time (7 main
features) - correct answer ✔1. Very little (or no) inventory held.
2. A pull approach: inventory is 'pulled in' in response to orders received.
3. A very high degree of coordination is needed internally and with suppliers
and customers. The management information system has to be very good
4. Reliable suppliers and transportation
5. Flexible suppliers
6. Supplies of high quality
7. Supplies available quickly (often implies that manufacturers have to be
close to both their suppliers and customers).


Current Developments In Management Accounting: Target Costing (4 steps) -
correct answer ✔1. From research of the market determine a selling price at
which the company expects to achieve the desired market share - the target
selling price.

, 2. Decide on the profit required (e.g. a required profit margin, or a required
return on investment)
3. Calculate the maximum cost per unit in order to achieve the required profit -
this is the target cost
4. Estimate the actual cost of production and compare with the target cost.


Current Developments In Management Accounting: Target costing - how to
close cost gap - correct answer ✔1. Cheaper materials
2. Fewer features
3. Outsource to a cheaper producer
4. More efficient production e.g. longer production runs


Current Developments In Management Accounting: Key when calculating
target cost? - correct answer ✔Try to calculate per unit, rather than working
with totals


Non-Financial performance metrics: Fitzgerald and Moon building blocks
(industry + 3 blocks) - correct answer ✔Applicable in service industry.
*Main idea:* the main difference between building blocks model and other
performance measurement frameworks is that it also focuses on rewards


*3 key blocks:*
1. Dimensions: dimensions of performance that should be measured (e.g.
2. Standards: KPIs need to be capable of ownership (i.e. the person
responsible feels able to influence the measure), should be achievable and
should be fair.
3. Rewards: should be clear, provide motivation and controllable i.e.
managers can influence their rewards by their behaviour.

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