Paper F5 Performance Management
Performance Management (PM) is the fifth exam you will be required to appear in your ACCA journey and the second exam of the ACCA skills level. Performance Management (PM) builds upon the knowledge gained in Management Accountant (MA) exam. The syllabus will examine the understanding to manage the performance of the business. NCFM Academy Hyderabad offering the ACCA Paper F5 Performance Management course in Ameerpet.
Performance Management (PM) is a three-hour computer-based exam. All questions in the exam are compulsory. The exam will contain both computational and discursive elements. Some questions will adopt a scenario/case study approach. Formulae sheet will be provided to the candidates. Prior to the start of the exam, candidates are given an extra 10 minutes to read the exam instructions.
Section A of the exam comprises 15 objective test questions of 2 marks each.
Section B of the exam comprises of three case style questions. These each contain five objective test questions which are based around a common scenario. Section C of the exam comprises two 20 mark constructed response questions. The two 20 mark questions will come from decision-making techniques, budgeting and control and/or performance measurement and control areas of the syllabus. These questions may also include requirements related to the information systems area of the syllabus.
Syllabus of ACCA Paper F5 Performance Management
The syllabus is divided into five sections with further sub-sections.
A- Information, technologies, and systems for organizational performance
This is the first section of this course and it covers information systems, data analytics and how to gather and manage information. Students will be required to understand and explain the role of information systems, discuss their costs and benefits, explain their uses and the controls which may be necessary to be placed over information system in order to ensure the integrity and safety of the information.
Students will also be required to understand how information is generated, what are its sources and how may it be used. An understanding of different types of information systems will also be required.
This section will also introduce the concept of big data and its characteristics.
B- Specialist cost and management accounting techniques
This is the second section of this course and it covers different methods of costing including Activity Based Costing (ABC), target costing and life cycle costing. Students will be required to have technical proficiency in these costing methods.
This section will also introduce the concept of throughput accounting. Students will be required to understand, apply the theory, calculate and interpret the results of throughput accounting. The understanding of the students in this area will be tested in decision-making scenarios.
C- Decision-making techniques
The third section of this syllabus covers decision-making techniques. Students will need to understand the concept of relevant costing, identify it and analyze the results. This section will introduce Cost Volume analysis; students will learn and understand the concepts of breakeven point, a margin of safety and contribution margin. Students will be required to calculate, interpret and explain the breakeven point and the usage and limitation of cost-volume analysis in decision making.
This section will also introduce the concept of limiting factors and their calculation in single scarce resource and multiple scarce resource scenarios. Students will be required to explain and calculate shadow prices and slack.
Pricing decisions, theories, and techniques will also be introduced in this section. Students will be required to understand and calculate price elasticity, optimum selling price and quantity for an organization. Different pricing strategies will be covered under this section, students will be required to have a thorough understanding and technical proficiency and calculation wherever necessary.
Students will be required to understand and perform make or buy decisions in situations involving shut down of production, one-off contracts, and joint products. This section also covers dealing with risk and uncertainty in decision making and the techniques which can be applied to minimize risk. Expected values and sensitivity analysis will be covered to further aid decision making. Students will be required to interpret decision trees and calculate the value of perfect and imperfect information.
D- Budgeting and control
This is the fourth section of this syllabus and it covers budgeting and control in extensive detail. Students will be required to have an understanding of different budgeting methods, their usefulness, and their limitations. Students will be required to prepare flexible, rolling and activity-based budgets.
Understanding will be required of the usefulness of budgets, the role of employees in the target setting and achieving the budgetary targets. Fixed and Variable cost analysis using the high low method will be required, along with the understanding of the learning curve.
Standard costing will be covered in this section building upon previously studied concepts in management accounting (MA). Students will be required to identify the cause and calculate material mix, yield variances, sales mix, and quantity variances. Students will also be required to analyze the performance using variance analysis.
E- Performance measurement and control
This is the fifth section of this course and it covers performance measurement and control. Students will be required to describe, calculate and interpret financial performance indicators for profitability, liquidity, and risk in both the manufacturing and service sectors. Students will also be required to calculate and interpret non-financial performance indicators and discuss ways of improving future performance based on past records.
This section will also cover divisional and transfer prices. Students will be required to understand and illustrate transfer prices using variable and full cost; ho transfer prices distort the performance of divisions.
This section will introduce return on investment and residual income ratios, their interpretation, and limitations. The section also covers performance analysis in not for profit organizations and the public sector.
Students will also be required to have an understanding of the external0 considerations in performance management. How the external environment of the organization affects the performance and ways in which the effect of the external environment can be limited.
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