ACCA Applied Knowledge · Management Accounting · Performance measurement - overview
A hospital trust is a not-for-profit organisation. Which of the following measures of performance best reflects the 'economy' element of value for money?
Comparing the cost of medical supplies with what similar trusts pay for the same quality measures economy, which is about buying inputs at the lowest cost for the required quality. Patients per nurse shows efficiency and recovery rates show effectiveness.
- AThe cost per patient treated compared with the budgeted cost per patient
- BThe number of patients treated per nurse per month
- CThe cost of buying medical supplies compared with the price paid by similar trusts for the same qualityCorrect
- DThe percentage of patients who recover fully after treatment
Explanation
Economy means obtaining inputs of the required quality at the lowest cost. Comparing the price paid for supplies of equal quality with the price paid by others measures this directly. Patients per nurse measures efficiency, and recovery rates measure effectiveness.
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