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ACCA Applied Skills · Financial Management · Financial and other objectives in not-for-profit organisations

A not-for-profit housing association spent $480,000 on maintenance and repaired 1,200 homes, against a budget of $500,000 for 1,000 homes. Assuming repairs per home are of equal standard, what is the actual cost per home repaired and is it better or worse than budget?

Actual cost per home repaired is $480,000 divided by 1,200, which equals $400. The budget was $500,000 divided by 1,000, or $500 per home. Since $400 is lower than $500, the association performed better than budget on cost efficiency.

  1. A$400, better than the budgeted $500Correct
  2. B$400, worse than the budgeted $500
  3. C$480, better than the budgeted $500
  4. D$500, in line with budget

Explanation

Actual cost per home is 480,000 / 1,200 = $400. Budgeted cost per home is 500,000 / 1,000 = $500. The actual cost is lower, so efficiency is better than budget. The $480 option mistakenly uses the cost per thousand-based figure rather than dividing by actual homes.

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