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ACCA Applied Knowledge · Management Accounting · Performance measurement - overview

A university department had last year: income $900,000, costs $860,000, 400 graduates of whom 340 gained employment within six months. This year it spent 5% more in total, graduated 420 students, and 357 gained employment. Which is correct for cost per graduate and employment rate?

Cost per graduate stayed at $2,150 and the employment rate stayed at 85%. Last year, $860,000 divided by 400 graduates is $2,150. This year, $903,000 (5% higher) divided by 420 is also $2,150, and 357 divided by 420 equals 85%, the same as 340 divided by 400.

  1. ACost per graduate rose from $2,150 to $2,150 and the employment rate fell
  2. BCost per graduate fell from $2,150 to $2,150 and the employment rate was unchanged at 85%
  3. CCost per graduate stayed at $2,150 and the employment rate was unchanged at 85%Correct
  4. DCost per graduate rose to $2,257.50 and the employment rate rose to 90%

Explanation

Last year cost per graduate = 860,000/400 = $2,150. This year cost = 860,000 x 1.05 = 903,000; /420 = $2,150. Employment rate last year 340/400 = 85%; this year 357/420 = 85%. So both are unchanged. The distractors misstate the figures.

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