ACCA Applied Skills · Performance Management · Specific performance analysis issues in not-for-profit organisations and the public sector
A charity buys printing paper for its fundraising leaflets at a price 15% below the price paid last year, with no change in quality. Which value for money element does this demonstrate?
This demonstrates economy, which is about obtaining inputs of the required quality at the lowest possible cost. The paper is the same quality but cheaper. It does not show efficiency or effectiveness, as no outputs or objectives are measured.
- AEconomyCorrect
- BEfficiency
- CEffectiveness
- DSustainability
Explanation
Economy means acquiring inputs of appropriate quality at the lowest cost. A lower price for the same quality paper is an economy gain. It says nothing about outputs per unit of input (efficiency) or whether the leaflets raised more funds (effectiveness).
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