ACCA Applied Skills · Paper M
ACCA Applied Skills Performance Management (PM) Study Guide
ACCA Performance Management (PM) tests how managers use cost and performance information to plan, decide and control. It is a three-hour computer-based exam out of 100 marks. Sixty marks are objective test questions and 40 marks are written answers. You need 50% to pass. Practise calculations and short explanations.
Performance Management is a three-hour computer-based exam. Section A has 15 two-mark objective test questions. Section B has three OT cases, each a scenario with five two-mark questions. Section C has two 20-mark constructed response questions. So 60 marks are objective and 40 marks are written. All questions are compulsory, so you cannot skip a topic and hope it does not appear.
The paper mixes calculation with judgement. You may need to compute a relevant cost, a variance or a transfer price. You then need to say what the number means for a manager. Topics such as ABC, target costing, life-cycle costing, throughput accounting, CVP, limiting factors, pricing, budgeting, variances, performance measurement and divisional performance all link back to one idea: better decisions and better control.
Students usually score well on routine calculations and lose marks on application. Objective questions are marked all or nothing, so a small slip in method costs the full two marks. In Section C, the written parts often decide whether you pass comfortably or only just. Short, specific comments tied to the scenario earn marks. Generic textbook lists do not.
Performance Management: chapters and topics
Management information systems and data analytics
Management information systems
Management information systems and data analytics
Uses and control of information
Management information systems and data analytics
Big data and data analytics
Specialist cost and management accounting techniques
Activity-based costing
Specialist cost and management accounting techniques
Target costing
Specialist cost and management accounting techniques
Life-cycle costing
Specialist cost and management accounting techniques
Throughput accounting
Specialist cost and management accounting techniques
Accounting for environmental and sustainability factors
- Environmental Management Accounting (EMA) Overview
- Categories of Environmental Costs
- Identifying and Allocating Environmental Costs
- Input/Output Analysis and Material Flow Cost Accounting
- Activity-Based Costing and Life Cycle Costing for Environmental Costs
- Sustainability Reporting and the Triple Bottom Line
Decision-making techniques
Relevant cost analysis
Decision-making techniques
Cost-volume-profit analysis (CVP)
Decision-making techniques
Limiting factors
Decision-making techniques
Pricing decisions
Decision-making techniques
Make-or-buy and other short-term decisions
Decision-making techniques
Dealing with risk and uncertainty in decision-making
Budgeting and control
Budgetary systems and types of budget
- Purposes and Objectives of Budgeting
- Budget Preparation Process and Principal Budget Factor
- Budgeting Approaches: Incremental, Zero-Based and Activity-Based
- Fixed, Flexible, Rolling and Continuous Budgets
- Participative, Imposed and Negotiated Budgeting Styles
- Incremental, Beyond Budgeting and Other Budget Models
- Quantitative Techniques: Forecasting, High-Low and Learning Curve
Budgeting and control
Analytical techniques in budgeting and forecasting
Budgeting and control
Standard costing
- Standard Costing Basics and Types of Standards
- Material Price and Usage Variances
- Labour Rate, Efficiency and Idle Time Variances
- Variable and Fixed Overhead Variances
- Sales Price and Sales Volume Variances
- Operating Statements and Reconciling Budget to Actual Profit
- Mix and Yield Variances
- Interpreting Variances and Planning and Operational Variances
Budgeting and control
Material mix and yield variances
Budgeting and control
Sales mix and quantity variances
Budgeting and control
Planning and operational variances
Budgeting and control
Performance analysis
Performance measurement and control
Performance analysis in private sector, public sector and not-for-profit organisations
Performance measurement and control
Divisional performance and transfer pricing
Performance measurement and control
Specific performance analysis issues in not-for-profit organisations and the public sector
How to prepare Performance Management
Plan your study around the 24 chapters, but give most time to the topics that need both calculation and comment. Build accuracy first, then speed, then exam technique.
- Group the chapters into blocks: information and data; costing techniques; decision-making; budgeting; variances; performance measurement. Plan each block as a unit so you see how the ideas connect.
- Learn each technique's purpose before the method. For example, know why ABC changes overhead absorption, or why throughput accounting treats labour as a fixed cost in the short run. This helps you answer scenario questions, not just numerical ones.
- Work every calculation topic with a fresh question until you can do it without notes. Focus on relevant cost analysis, limiting factors, CVP, variances and transfer pricing, as these are easy to get wrong under pressure.
- Build a one-page summary for each chapter: formulas, steps, when to use the technique, advantages and limitations. Review these on your phone in short sessions.
- Practise objective questions by topic first, then in mixed sets of 15. Check why each wrong option is wrong. Because there is no partial credit, look for the common traps in each topic.
- Practise full Section C questions in writing. Set out workings clearly, then write short points that link to the scenario. Compare your comments with a model answer and note what you missed.
- Revise variances and performance analysis together. Practise calculating a variance, suggesting a cause and recommending action. Link divisional performance to transfer pricing and goal congruence.
- In the last weeks, sit at least two full three-hour mocks under timed conditions. Review every error, sort it as knowledge, method or time, and fix the biggest group first.
Time management in the exam
- Treat the paper as 100 marks in 180 minutes. That is about 1.8 minutes per mark. A two-mark objective question should take about 3.5 minutes at most, and many take less.
- Do not stay stuck on one objective question. Make your best choice, flag it and return if time remains. Every question is compulsory and an unanswered one scores nothing.
- Read each OT case scenario once carefully before the first question. Then answer the five questions in order, since the data is shared.
- In Section C, give each 20-mark question about 36 minutes. Spend the first few minutes reading the requirements and planning your layout.
- Do the easy marks first in a constructed response question. Start with the part you can do cleanly, and keep workings tidy so you can pick up marks even if the final figure is wrong.
- Keep the last 10 to 15 minutes for review: flagged questions, units and signs on variances, and whether each written point answers the requirement.
Mistakes that cost marks in Performance Management
Treating objective questions as quick and careless
Fix: Write brief workings on your scratch paper, check the question wording for what is asked, and test each option before you choose.
Including irrelevant costs in decision questions
Fix: For each cost ask: is it future, and does it change with the decision? If not, leave it out.
Giving generic written answers in Section C
Fix: Make each point specific. Use numbers and facts from the case, state the consequence for the business and suggest an action.
Calculating variances without interpreting them
Fix: Label every variance F or A, think of linked causes such as cheaper material leading to lower quality, and say who should investigate.
Weak understanding of when to use each technique
Fix: For each technique, note the problem it solves, the data it needs and its main limitation. Use that note to choose the method in scenarios.
Poor layout and unclear workings
Fix: Use headings, label each line and show formulas. Clear workings earn method marks even if the final answer is wrong.
Performance Management: frequently asked questions
How is the ACCA PM exam structured?
It is a three-hour computer-based exam out of 100 marks. Section A has 15 two-mark objective test questions, Section B has three OT cases of five two-mark questions each, and Section C has two 20-mark written questions. All questions are compulsory.
What is the pass mark for Performance Management?
The pass mark is 50%. Objective questions are marked all or nothing, with no penalty for wrong answers, so you should answer every question.
Is PM more about calculations or written answers?
Both matter. Many questions need a calculation, but you must also explain results and advise managers. Sixty marks are objective and 40 are written, and the written answers often need comment as well as numbers.
When can I sit the PM exam?
PM is a session exam held in March, June, September and December. Only limited variants are offered in March and September, and all variants in June and December. Check ACCA's current timetable before booking.
How should I use practice questions for PM?
Start with topic-based objective questions, then move to mixed sets and full Section C questions. Review every wrong answer to find whether the cause was knowledge, method or time. Finish with timed full mocks.