ACCA Applied Knowledge · Business and Technology · The purpose and types of business organisation
A charity that supports homeless people sets a target of keeping its administration costs below 10% of total donations received. This target is best described as:
Limiting administration costs to 10% of donations is a secondary objective. It supports the charity's primary mission of helping homeless people by ensuring more funds go to the cause. Charities do not seek profit maximisation or shareholder returns.
- AA secondary objective supporting its primary objectiveCorrect
- BA profit maximisation objective
- CA shareholder return objective
Explanation
The charity's primary objective is its mission of helping the homeless. Controlling administration costs is a secondary objective, since it helps ensure funds are used effectively for that mission. Charities have no shareholders and do not aim to maximise profit.
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