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ACCA Strategic Professional · Advanced Performance Management · Performance optimisation in specific contexts

A city council library service spent $600,000 last year and lent 400,000 books. This year it spent $540,000 and lent 420,000 books. The council's stated objective is to raise adult literacy in the city, but literacy rates were unchanged. Which conclusion is best supported?

Efficiency improved but effectiveness has not been shown. Cost per book loaned fell from $1.50 to about $1.29, so more output was obtained per dollar. However, the objective was higher adult literacy, which stayed flat, so the service has not demonstrated that it achieves its intended outcome.

  1. AEfficiency improved, but effectiveness has not been demonstratedCorrect
  2. BEfficiency and effectiveness both improved
  3. CEconomy worsened, because total spending fell
  4. DEffectiveness improved, because loans increased

Explanation

Cost per loan fell from $1.50 ($600,000/400,000) to about $1.29 ($540,000/420,000), so efficiency improved. Effectiveness concerns achieving the objective of higher literacy, which did not change. Loan volumes are an output, not an outcome, so option D confuses output with effectiveness.

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