ACCA Applied Knowledge · Management Accounting · Accounting for management
A retail company's finance director compares the actual monthly costs of each store with the budget and asks store managers to explain the differences. Which purpose of management information is MAINLY being served?
The purpose served is control. Comparing actual store costs with budget and asking managers to explain differences is a feedback process that monitors performance and prompts corrective action, unlike planning, which looks forward, or statutory reporting, which is aimed at external users.
- AControlCorrect
- BStrategic planning
- CStatutory reporting to shareholders
- DLong-term investment decision-making
Explanation
Comparing actual results with budget and investigating differences is the feedback process of control. Strategic planning looks ahead at long-term objectives, and statutory reporting is external financial reporting, so neither describes this activity.
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