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					                                                Final Assessment




                         ACCA

                       Paper F5

         Performance Management
                June 2009




       Final Assessment – Answers


             To gain maximum benefit, do not refer to these
             answers until you have completed the final
             assessment questions and submitted them for
             marking.




KAPLAN PUBLISHING                                   Page 1 of 19
ACCA F5 Performance Management




© Kaplan Financial Limited, 2008



All rights reserved. No part of this examination may be reproduced or transmitted in any form
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Page 2 of 19                                                         KAPLAN PUBLISHING
                                                                            Final Assessment


ANSWER 1
                      Budgeted overheads          $880,000
(a)   (i)    OAR =                              =          = 11% of list price
                     Budgeted level of activity     $8m


             Selling and distribution charge for Order A = 11% of $1,200         = $132
             Selling and distribution charge for Order B = 11% of $900           = $99

      (ii)   Cost driver rates

             Invoice processing


                                  25% × $280,000
             Cost per invoice =                   = $8.75 per invoice
                                   8,000 invoices


                                        75% × $280,000
             Cost per invoice line =                        = $7.50 per invoice line
                                       28,000 invoice lines


             Packing

             $32 for large packages and $25 for small packages.

             Delivery


                                   $40,000
             Loading costs =                   = $40 per journey
                                1,000 journeys


             There are 12 small packages to a lorry and so the loading costs are $40/12 =
             $3.33 per small package.

             There are 6 large packages to a lorry and so the loading costs are $6.67 per
             large package.


                                $180,00 − $40,000
             Mileage costs =                      = $0.40 per mile
                                  350,000 miles


             Other overheads


                                 $200,000
             Cost per order =                = $25 per order
                                8,000 orders




KAPLAN PUBLISHING                                                                Page 3 of 19
ACCA F5 Performance Management


                                                                  A                B
                                                                  $                $
               Invoice processing                                8.75             8.75
               $7.50 × 2                                        15.00
               $7.50 × 8                                                         60.00
               Packing                                          25.00            32.00
               Delivery                                          3.33             6.67
               $0.40 × 8                                         3.20
               $0.40 × 40                                                        16.00
               Other overheads                                  25.00           25.00
                                                               _____           ______
               Charge for selling and distribution              80.28          148.42
                                                               _____           ______


(b)    Strengths and weaknesses of proposed system

       The present system is very simple but makes no attempt to link the selling and
       distribution costs to the factors which cause those costs. The present system simply
       charges all orders a blanket rate of 11% on list price.

       The proposed ABC system is still very simple but makes some effort to determine the
       cost drivers, i.e. those factors which are most closely related to the way in which the
       costs of an activity are incurred. For instance, it has been found for the invoice
       processing costs that the costs are affected by the number of invoices issued, but
       also by how complicated the invoices are, i.e. how many different lines there are on
       the invoice.

       Charging out the invoice processing costs on the basis of the two cost drivers above
       will result in more accurate costs and will give more information about the cost
       structure and the cost drivers in order to improve cost control. Once the cost structure
       is known, efforts can be made to reduce the volume of activity of the cost driver (e.g.
       the 28,000 invoice lines) and/or the cost of the cost driver (e.g. the £7.50 per invoice
       line).

       It is argued by ABC supporters that the better costs calculated under ABC can then
       be used as the basis for fixing selling prices and that these selling prices relate to the
       true cost of the order and thus will prevent loss-making orders.

       F plc can also compare the true costs of the different elements of the system against
       the costs of outsourcing.

       The more accurate costs determined under an ABC system can be used to justify
       selling prices or selling price increases to customers.

       Whilst it is undoubtedly true that ABC gives more accurate costs, it is also true that it
       will be more expensive to implement and the benefit may not exceed the cost.
       The proposed system, here, is still very simple and it is possible that a more detailed
       analysis would provide further useful information.

       ABC attempts to find the cost driver for each type of cost and thus avoid the
       arbitrariness of absorption costing but, here, some costs are still charged on an
       arbitrary basis, e.g. the other overheads.




Page 4 of 19                                                            KAPLAN PUBLISHING
                                                                Final Assessment


                                   MARKING GUIDE
                                                                 Marks
(a)     (i)    OAR                                          1
               Order A costs                                1
               Order B costs                                1
                                                            _
               Total                                                      3

        (ii)   Cost driver rates       Invoice processing   2
                                       Packing              1
                                       Delivery             2
                                       Other                1
               Order A costs (0.5 per cost element)         3
               Order B costs (0.5 per cost element)         3
                                                            _
               Total                                                     12

 (b)    1 mark for each point made, to a maximum of 5                     5
                                                                         __
Total                                                                    20
                                                                         __




KAPLAN PUBLISHING                                                  Page 5 of 19
ACCA F5 Performance Management


ANSWER 2
(a)    Step 1: determine limiting factor
                                                              Resources needed               Resources available
       Cleaning materials
          0.2 (W) × 8,000 + 0.3 (W) × 10,500                       4,750                              5,000
       Direct labour
          0.2 (W) × 8,000 +             1
                                         3   (W) × 10,500          5,100                              6,000
       Machine hours
          1
              6   (W) × 8,000 + 0.5 (W) × 10,500                   6,583                              5,000


       ∴ Machine hours are the limiting factor.

       Workings
                                                                  Laundry                          Dry cleaning
       Cleaning materials
          $10/litre × Number of litresBal                           2.00                              3.00
       Direct labour
         $6/hour × Number of hoursBal                               1.20                              2.00
       Variable machine cost
          $3/hour × Number of hoursBal                              0.50                              1.50


       We can work out the balancing figures.


                                                    Laundry                                           Dry cleaning
                                                       $                                                    $
       Cleaning materials
          $10/litre × 0.2 litres                      2.00          $10/litre × 0.3 litres                3.00
       Direct labour
          $6/hour × 0.2 hours                         1.20          $6/hour ×          1
                                                                                        3   hour          2.00
       Variable machine costs
          $3/hour ×      1
                             6   hour                 0.50          $3/hour × 0.5 hour                    1.50


       Step 2: Key factor analysis
                                                                       Laundry                      Dry cleaning
                                                                          $                               $
       Selling price                                                     7.00                          12.00
       Cleaning materials                                                2.00                           3.00
       Direct labour                                                     1.20                           2.00
       Variable machine cost                                             0.50                           1.50
                                                                        ____                           ____
       Contribution per unit                                                3.30                         5.50
       ÷ Number of machine hours per unit                                  ÷   1
                                                                                   6                    ÷ 0.5
       Contribution per machine hour                                       19.80                        11.00
       Priority                                                             1st                          2nd




Page 6 of 19                                                                                KAPLAN PUBLISHING
                                                                                          Final Assessment


                               Units                                    Machine hours      Contribution
                                                                                                £
      Laundry                  8,000              ×   1
                                                          6   hour       1,333.33             26,400
                                          Bal 2                                     Bal
      Dry cleaning             7,333.33           × 0.5 hour             3,666.67
                                                                         _________
                                                                                              40,333
                                                                                              ______
                                                                         5,000                66,733
                                                                         _________            ______


      Tutorial note:

      Notice that the minimum order does not come into it. The optimum plan as shown
      above fulfils the minimum requirement.

      Unusually we were not actually asked for contribution or profit but will need it later on.

(b)   (i)
                                                                           Laundry         Dry cleaning
                                                                              $                  $
              Selling price                                                 5.60              13.20
              Cleaning materials                                            2.00               3.00
              Direct labour                                                 1.20               2.00
              Variable machine cost                                         0.50
                                                                            ____               1.50
                                                                                              ____
              Contribution per unit                                          1.90              6.70


              Let L = Number of laundry services
              Let D = Number of dry cleaning services

              Objective function:

              Maximise contribution = 1.9L + 6.7D

              Subject to:

              1      0.2L + 0.3D            ≤     5,000        (Cleaning materials)
              2      0.2L +      1
                                  3   D     ≤     6,000        (Direct labour)
              3      1
                         6   L + 0.5D       ≤     5,000        (Machine hours)
              4      L                      ≥     1,200        (Minimum requirement for laundry)
              5      D                      ≥     2,000        (Minimum requirement for dry cleaning)
              6      L                      ≤     14,000       (Maximum demand for laundry)
              7      D                      ≤     9,975        (Maximum demand for dry cleaning)
              8      L, D                   ≥     0            (Non-negativity constraint)




KAPLAN PUBLISHING                                                                             Page 7 of 19
ACCA F5 Performance Management


       (ii)    Tutorial note:

               In order to plot the graph we must turn the constraints into equations. Then
               we can plot the lines which the equations represent on the graph.

               Constraints 4 – 7 are the easiest and simply represent horizontal and vertical
               lines on the graph.

               L        =        1,200
               D        =        2,000
               L        =       14,000
               D        =        9,975

                  D
               9,975




               2,000

                       1,200             14,000   L

               The first constraint is a little bit more difficult. The topic is LINEAR
               programming and we are therefore talking about straight lines. We need two
               points to define a straight line:

               0.2L + 0.3D = 5,000

               The easiest thing to do usually is to make one of the variables equal to zero
               and then find the value of the second variable. Then make the second
               variable equal to zero and find the value of the first.

               If L = 0, then 0.2L = 0 and the equation becomes:

               0.3D     =       5,000


                                5,000
               ∴D       =             = 16,667
                                 0.3


               If D = 0, then 0.3D = 0 and the equation becomes:

               0.2L     =       5,000


                                5,000
               ∴L       =             = 25,000
                                 0.2


               The straight line therefore connects 16,667 on the D axis with 25,000 on the
               L axis.




Page 8 of 19                                                         KAPLAN PUBLISHING
                                                                                                  Final Assessment


                     D

           16,667




                                                                  25,000 L

           Similarly, for the second and third constraints:


           0.2L +        1
                             3D   = 6,000

                    L             D

                 0 18,000
            30,000      0


            1
                6   L + 0.5D = 5,000

                    L             D

                 0 10,000
            30,000      0



           Linear programming solution for W plc

            Number of 18,000                      L = 1,200                       L = 14,000
           dry cleaning
             services
                        16,000


                                  14,000
                                                  Direct
                                  12,000          labour
                                                  0.2L + 0.3D
                                                  = 5,000
                                  10,000                                                                  D = 9,975
                                                      Machine hours
                                                      1/6L + 0.5D = 5,000
                                                  b
                                      8,000

                                                                                                    Direct
                                      6,000                                                         labour
                                                           Feasible           c                     0.2L + 1/3D
                                                            region                                  = 6,000
                                      4,000

                                                  a                           d                           D = 2,000
                                      2,000
                                                        ISO – contribution line

                                         0
                                              0        5,000      10,000 15,000         20,000   25,000      30,000

                                                                                                       Number of
                                                                                                        laundry
                                                                                                        services

KAPLAN PUBLISHING                                                                                      Page 9 of 19
ACCA F5 Performance Management


                Tutorial note:

                The axes could have been shown the other way around, i.e. with laundry
                services on the vertical axis and dry cleaning services on the horizontal axis.

                Examination tip:

                The optimum solution can be found by one of two main methods – the iso-
                contribution line or ‘testing each corner’. Choose whichever method you
                prefer.

                Testing each corner

                The optimum solution has to be a ‘corner’, i.e. an intersection of two or more
                lines. The four corners on the graph have been labelled a, b, c and d. (These
                are the four corners of the feasible region.)

                We can eliminate node (a) as a possible optimum solution because it is not
                as good as node (b). Node (b) has the same number of laundry services
                (1,200) as (a) but it has more dry cleaning services and therefore more
                contribution and is better.

                Similarly, node (d) is no good. Node (c) is better. Node (c) has the same
                number of laundry services (14,000) as (d) but has more dry cleaning
                services and therefore more contribution.

                The choice is therefore between node (b) and (c). We need to find the values
                for L and D at those two points and calculate the contributions. We need to
                solve simultaneous equations. Luckily they are fairly simple.

                Node (b)

                Node (b) lies on the intersection of two lines:

                1
                    6   L + 0.5D          =       5,000
                L                         =       1,200

                We can substitute this value for L into the first equation and find D:

                1
                    6   × 1,200 + 0.5 D   =       5,000
                200 + 0.5D                =       5,000
                0.5D                      =       5,000 − 200
                0.5D                      =       4,800


                            4,800
                ∴D=                       =       9,600
                             0.5


                Contribution = 1,200 × 1.9 + 9,600 × 6.7 = 66,600




Page 10 of 19                                                            KAPLAN PUBLISHING
                                                                          Final Assessment


           Node (c)

           Node (c) lies on two lines:

            1
                6   L + 0.5D          =       5,000
           L                          =       14,000

           Substituting the value of L into the first equation:

            1
                6   × 14,000 + 0.5D   =       5,000
           2,333.33 + 0.5D            =       5,000
           0.5D                       =       2,666.67


                        2,666.67
           ∴D=                        =       5,333.33 units
                           0.5


           Contribution = 14,000 × 1.9 + 5,333.33 × 6.7 = 62,333

           The optimum plan according to the linear programming solution is to
           undertake 1,200 laundry services and 9,600 dry cleaning services. This gives
           a contribution of £66,600.

           This contribution is not as good as the £66,733 contribution that we got with
           the original plan. Therefore we should stick with the original selling prices.

           Tutorial note:

           The iso-contribution line

           The optimum point could also be found by means of an iso-contribution line.

           An iso-contribution line is a line connecting points representing combinations
           of L and D which give the same contribution. If the iso-contribution line is then
           moved out from the origin parallel to its original position, then this will
           represent a better line with more L and/or more D and therefore more
           contribution. The idea then is to move the line out as far as possible until it is
           just about to leave the feasible region. The last point it touches before it
           leaves the feasible region is the optimum solution.

           The first step is to set up the iso-contribution line.

           L has a contribution of 1.9
           D has a contribution of 6.7

           1.9 × 6.7 = 12.73

           To get a contribution of 12.73 we would need 6.7 Ls (12.73/1.9) or 1.9Ds
           (12.73/6.7). If we draw a line connecting 6.7 on the L axis with 1.9 on the D
           axis then this would be an iso-contribution line with every point giving a
           contribution $12.73.


KAPLAN PUBLISHING                                                             Page 11 of 19
ACCA F5 Performance Management


                After this first step the line is often not that useful, i.e. is difficult to plot on the
                graph. We simply multiply both numbers by 2 or 5 or 10 or 100 or 1,000 or
                whatever until it is easy to plot the line.

                We will multiply by 1,000 and therefore the line will connect 6,700 on the L
                axis with 1,900 on the D axis.

                Once the line has been drawn it can be moved out parallel from its original
                position until it leaves the feasible region. The last point it touches is the
                optimum solution which is node (b).


                                        MARKING GUIDE
                                                                                       Marks
 (a)     Determining limiting factor (½ mark per balancing figure
         on cost card and 1 mark per resource required figure)                    6
         Key factor analysis (1 mark for ranking)                                 1
                                                                                  _
                                                                                                 7
 (b)     (i)     ½ mark for each constraint, 1 mark for objective                 5


         (ii)    Drawing graph                                                    6
                 Identifying optimal point                                        1
                 Answering question                                               1
                                                                                  _
                                                                                                13
                                                                                                __
 Total                                                                                          20
                                                                                                __




Page 12 of 19                                                                 KAPLAN PUBLISHING
                                                                                  Final Assessment


ANSWER 3
Working
                                Original standard         Revised standard            Actual
Fruit           Price                  $0.16                  $0.19                   $0.18
                Quantity               400 kg                 400 kg                 428 kg
Syrup           Price                  $0.10                  $0.12                   $0.12
                Quantity               700 kg                 700 kg                 742 kg
Pectin          Price                  $0.332                 $0.332                 $0.328
                Quantity                99 kg                  99 kg                 125 kg
Citric Acid     Price                  $2.00                  $2.00                  $0.95
                Quantity                1 kg                    1 kg                   1 kg


(a)      The planning variances relate only to fruit and syrup prices.


                                  Fruit             Syrup
                                   $                  $
         RSQ × RSP                    76             84
         RSQ × SP                     64
                                      __
                                                     70
                                                     __
                                      12 A           14 A
                                      __             __


         Total planning variance = $12 + $14 = $26 A

(b)
                                  Fruit             Syrup           Pectin          Citric Acid
                                   $                  $               $                  $
         AQ × AP                  77.04             89.04              41.00           0.95
         AQ × SP                  81.32             89.04              41.50           2.00
         SQ × SP                  76.00             84.00              32.87           2.00

         Price variance               4.28 F         0                   0.50 F        1.05 F
         Usage variance               5.32 A         5.04 A              8.63 A        0


         Total price variance                = $5.83 F
         Total usage variance                = $18.99 A
         Total ingredients variance          = $13.16 A

(c)      The main problem with conventional variance analysis for budgetary control reporting
         purposes is that its emphasis on comparison between actual and planned
         performances results in a disregard for changes in these planned results. Because
         standards become out of date and unrealistic, the traditional accounting model does
         not serve as an opportunity cost system.

         The operational variance measures management's operating efficiency by comparing
         actual results with revised standard. This variance reflects opportunity costs. That is,
         the gain or loss as a result of actual performance differing from a realistic standard.
         Hence operational variances tend to be controllable. The planning variance compares
         the original budget with the revised budget. This variance reflects planning error.


KAPLAN PUBLISHING                                                                   Page 13 of 19
ACCA F5 Performance Management


         However, it may not be practical to find all possible perfect substitutes for the
         resources actually used. It may also be difficult to obtain accurate revised standard
         costs for the resources actually used and their substitutes. In general, there is a
         resistance to change. Most companies still use the traditional approach.

(d)
         Workings               Fruit      Syrup       Pectin      Citric Acid             Total
         AQ × AM              428        742          125              1                   1,296
         AQ × SM              432        756          106.92           1.08                1,296
         SQ × SM              400        700           99              1             1,164/0.97 = 1,200

         SP ($)                 0.19        0.12          0.332        2

         Variances
         Mix variance ($)       0.76 F      1.68 F        6.00 A       0.16 F              3.40 A
         Yield variance ($)     6.08 A      6.72 A        2.68 A       0.16 F             15.59 A


         Check: Mix + Yield = $3.40 A + $15.59 A = $18.99 A = Usage variance

(e)      The mix has been changed so that more of the expensive ingredient pectin has been
         used, and less of the cheaper ingredients, fruit and syrup, have been used. This has
         caused the overall adverse mix variance.

         The yield variance means that more input was required for the given output. This
         means there was an abnormal loss, causing the adverse variance.


                                        MARKING GUIDE
                                                                                     Marks
 (a)      Choosing only fruit and syrup prices                                   1
          Identification of the original and revised standard prices             1
          Fruit variance                                                         2
          Syrup variance                                                         2
                                                                                 _
                                                                                              6

 (b)      Each ingredient, 1 mark for the variances × 4                                       4

 (c)      1 mark for each advantage and disadvantage                                          2

 (d)      Mix variance                                                           3
          Yield variance                                                         3
                                                                                 _
                                                                                              6

 (e)      1 mark for each reason, to a maximum of                                             3
                                                                                             __
 Total                                                                                       20
                                                                                             __




Page 14 of 19                                                                 KAPLAN PUBLISHING
                                                                             Final Assessment


ANSWER 4
(a)   Budgetary control statement


                                        Flexed budget            Actual           Variance
                                              $                    $                  $
      Direct materials (W1)                34,000               33,500              500 F
      Direct labour (W2)                   45,900               44,000            1,900 F
      Production overhead(W3)              50,800               46,250            4,550 F
      Selling overhead (W4)                16,600               16,150              450 F
      Administration overhead              28,000               27,800              200 F
                                          _______              _______            _____
                                           175,300              167,700           7,600 F
                                          _______              _______            _____


      Workings

      (W1)    (30000/60) × 68 = 34,000

      (W2)    (40,500/60) × 68 = 45,900

      (W3)    Variable cost = (58,000 – 46,000)/20 = 600 per percentage

              68% is an extra 8% above 60%,
              making overhead cost − $46,000 + 8 × 600 = $50,800

      (W4)    Variable cost = (19,000 – 15,000)/20 = 200 per percentage
              Selling overhead = 15,000 + 8 × 200 = 16,600

(b)   A fixed budget is a budget which shows the costs and revenues for a single level of
      activity. A flexible budget shows costs and revenues for more than one level of
      activity so that costs etc. can be predicted for other activity levels.

      Fixed budgets are useful for controlling costs where the objective is to limit (cap) the
      level of expenditure – for example in the public sector ore in charities.

      Flexible budgets are used to control costs where the objectives are the efficient
      procurement and utilisation of resources.

(c)   The principle budget factor is the factor which limits the activities of the organisation
      during the budget period.

      It is important that the principal budget factor is identified at the outset of the budget
      preparation process. If this is not done any budgets which are prepared will be
      impossible to achieve.

      If budgets are impossible to achieve, any subsequent performance evaluation will be
      meaningless.




KAPLAN PUBLISHING                                                                Page 15 of 19
ACCA F5 Performance Management


(d)      The role of the budget committee is to communicate with budget holders and
         coordinate the budget setting process.

         The committee will produce a budget manual which provides detailed guidance for
         managers in preparing their budgets.

         The committee will communicate with the Board of Directors, advising them of the
         progress being made.


                                     MARKING GUIDE
                                                                          Marks
 (a)      Flexed budget
          Materials                                    1
          Labour                                       1
          Production overhead                          2
          Selling overhead                             2
          Admin overhead                               1
                                                       _
                                                                      7
          Variances, 1 mark each variance                             5
                                                                      _
                                                                                  12

 (b)      1 mark each point, to a maximum of                                       4

 (c)      1 mark for each valid point, to a maximum                                 4
 Total                                                                             20
                                                                                  ___




Page 16 of 19                                                      KAPLAN PUBLISHING
                                                                            Final Assessment


ANSWER 5
(a)   Financial performance

      Summary Income Statement
                                                 Budget          Actual
                                                  $000           $000
      Fee income (W1)                            6,075          6,300
                                                 _____          _____
      Costs:
      Consultants’ salaries (W2)                  2,025         2,025
      Bonus (W3)                                 _____             90
                                                                _____
                                                 2,025          2,115
      Other operating costs                      2,550          2,805
      Subcontract payments (W4)                      0             18
                                                 _____          _____
                                                 4,575          4,938
                                                 _____          _____
      Net profit                                 1,500          1,362
                                                 _____          _____


      (W1)    Fee income
              Budget               40,500 chargeable consultations × $150
              Actual               42,000 chargeable consultations × $150

      (W2)    Consultants’ salaries
              45 consultants × $45,000

      (W3)    Bonus
              40% of $(6,300,000 – 6,075,000)

      (W4)    Sub-contract payments
              120 consultations × $150

      It is clear that BLA has not performed as well as expected during the year to
      31 October 20X3. Whilst client income is above budget, other operating expenses
      reached a level which is more than 10% higher than the budget for the year, and thus
      it would be extremely useful to have a more detailed breakdown of other operating
      expenses for the year. Consultants have earned an aggregate bonus of $90,000 in
      respect of activity above budgeted levels. Payments to subcontractors amounted to
      $18,000. Actual profit amounts to $1,362,000 against a budget of $1,500,000. It
      would be extremely useful to see the results of the previous two years in order to
      assess whether there are any discernible trends in revenues and costs. The budget
      for the following year should be reviewed in the light of the actual performance of this
      year with particular reference to checking the footing of the assumptions upon which
      it has been prepared.




KAPLAN PUBLISHING                                                              Page 17 of 19
ACCA F5 Performance Management


(b)    Service quality

       Quality of service is the totality of features and characteristics of the service package
       that bear upon its ability to satisfy client needs. To some extent the increase in the
       number of complaints and non-chargeable consultations associated with the
       remedying of those complaints is indicative of a quality problem that must be
       addressed.

       •        Client complaints received during the year were nearly double the budgeted
                level.
       •        Also the number of remedial consultations was 405 against a budgeted level
                of only 45, which is exactly nine times higher than budget.

       Perhaps BLA Ltd should review and, if necessary, limit the amount of remedial
       consultancy provided to any one particular client.

(c)    Flexibility

       Flexibility may relate to the company being able to cope with flexibility of volume,
       delivery speed or job specification.

       It is a deliberate policy of BLA Ltd to retain 45 consultants thereby maintaining
       flexibility to meet increasing demand. The delivery speed will be increased as a
       consequence of the retention of consultants. The fact that links have been retained
       with retired consultants will give an added dimension of flexibility in times of very
       heavy demand upon its consultants.

(d)    Resource utilisation

       Resource utilisation measures the ratio of output achieved from those resources
       input. In this scenario the mean number of consultations per consultant may be used
       as a guide.

       Average consultations per consultant

                                                  Budget         Actual     Increase/(decrease)
       Chargeable consultations                    900            933              3.7%
       Non-chargeable                               24             36             50%

       It is interesting to note that consultants are being utilised above budgeted levels for
       both chargeable and non-chargeable consultations.

       These figures would also suggest that the proportion of chargeable consultations
       has decreased indicating a fall in utilisation. BLA Ltd has adopted an innovative
       approach that requires consultants to undertake non-chargeable business
       development consultations which have at their heart the intention of generating new
       business. Hence in the immediate sense there is a trade-off between resource
       utilisation and innovation.




Page 18 of 19                                                             KAPLAN PUBLISHING
                                                                               Final Assessment


(e)      Innovation

         Innovation should be viewed in terms of its impact on financial performance,
         competitiveness, service-quality, flexibility and resource utilisation in the short,
         medium and long term. Certainly the non-chargeable activity in terms of ‘business
         development’ is an innovative feature within the business of BLA Ltd, as is the non-
         chargeable remedial consultancy provided to clients who experience problems at
         the commencement of building works. The acquisition of ‘state of the art’ business
         software is by its very nature innovative. This has probably enabled BLA Ltd to
         differentiate its services from those of its competitors and enhance its reputation. The
         management should ensure the introduction of the software has not caused the
         increase in the number of complaints received.


                                       MARKING GUIDE
                                                                                       Marks
 (a)     One mark for each relevant point, up to a maximum of                             5
 (b)     One mark for each relevant point, up to a maximum of                             4
 (c)     One mark for each relevant point, up to a maximum of                             3
 (d)     One mark for each relevant point, up to a maximum of                             4
 (e)     One mark for each relevant point, up to a maximum of                             4
                                                                                         __
 Total                                                                                   20
                                                                                         __




KAPLAN PUBLISHING                                                                 Page 19 of 19

				
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Description: Here are few papers of ACCA for sake of guidance of the students who wants to take benefit during the course of their financial studies