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ACCA Strategic Professional · Advanced Performance Management · Financial performance measurement

A municipal council runs a waste collection service. Its manager reports that the service spent 2% less than budget and collected 98% of scheduled bins. A councillor asks whether the service delivered value for money across all three Es. The manager has so far addressed only spending against budget. Which measure would best address the 'economy' element specifically?

Economy is about buying inputs at the lowest cost for a given quality, so the best measure compares prices paid for fuel, labour and vehicles with market benchmarks. Cost per bin and bins per crew measure efficiency, while resident satisfaction measures effectiveness.

  1. ACost per bin collected compared with the previous year
  2. BPrice paid for fuel, labour and vehicles compared with the best available market pricesCorrect
  3. CPercentage of residents satisfied with the collection service
  4. DNumber of bins collected per crew per day

Explanation

Economy concerns acquiring inputs of appropriate quality at the lowest cost, so comparing input prices with market benchmarks tests it. Cost per bin links inputs to outputs and measures efficiency. Resident satisfaction relates to effectiveness, and bins per crew is a productivity (efficiency) measure.

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