Performance Management-PM

This article introduces the concepts of risk and uncertainty together with the use of probabilities in calculating both expected values and measures of dispersion. Relevant to MA, PM, AFM and APM Clearly, risk permeates most aspects of corporate decision-making (and life in general), and few can predict with any precision what the future holds in store.  Risk can take myriad […]

Decision making is an important aspect of the Performance Management syllabus, and questions on this topic will be common. The range of possible questions is considerable, but this article will focus on only one: linear programming The ideas presented in this article are based on a simple example. Suppose a profit-seeking firm has two constraints: labour, limited to 16,000 hours,

Cost-volume-profit analysis looks primarily at the effects of differing levels of activity on the financial results of a business In any business, or, indeed, in life in general, hindsight is a beautiful thing. If only we could look into a crystal ball and find out exactly how many customers were going to buy our product, we would be able to

Environmental management accounting is part of the Performance Management syllabus and requires students to describe the issues businesses face in managing environmental costs, and the different methods they may use to account for these. A member of the Performance Management examining team provides students with an introduction to environmental management accounting The two requirements of the Performance Management syllabus are

A follow-up to the first part of this article featuring a discussion on the five focusing steps of the theory of constraints, with examples of how these steps might be applied in practice or in the exam. In the previous article, a member of the Performance Management examining team revealed all about The Goal, the book in which the theory of

A member of the Performance Management examining team shares her latest read and how it changed her views on throughput accounting and the theory of constraints. I’ve just finished reading a book. It was the type of book that you pick up and you cannot put down (other than to perform the mandatory tasks that running a house and looking

Target costing and lifecycle costing can be regarded as relatively modern advances in management accounting, so it is worth first looking at the approach taken by conventional costing. Typically, conventional costing attempts to work out the cost of producing an item incorporating the costs of resources that are currently used or consumed. Therefore, for each unit made the classical variable

ABC undoubtedly requires an organisation to spend time and effort investigating more fully what causes it to incur costs, and then to use that detailed information for costing purposes. Conventional costing distinguishes between variable and fixed costs. Typically, it is assumed that variable costs vary with the number of units of output (and that these costs are proportional to the

There is no doubt that transfer pricing is an area that candidates find difficult. It’s not surprising, then, that when it was examined in June 2014’s Performance Management exam, answers were not always very good. The purpose of this article is to strip transfer pricing back to the basics and consider, first, why transfer pricing is important; secondly, the general