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ACCA Strategic Professional · Advanced Performance Management · Strategic management accounting

Brindle Retail's directors say that low cost alone no longer protects it, and they ask the management accountant to monitor whether its products are valued by customers relative to rivals. Which activity best reflects strategic management accounting supporting a differentiation strategy?

Analysing the premium customers will pay for distinctive features, against the cost of providing them, best supports differentiation. Strategic management accounting links external customer value and competitor positioning to cost information. Fixed spending cuts, routine variances and statutory reporting do not show whether differentiation creates profitable advantage.

  1. AAnalysing the premium customers will pay for distinctive features and the cost of providing themCorrect
  2. BReducing all discretionary spending by a fixed percentage
  3. CCalculating monthly material price variances
  4. DPreparing statutory financial statements on time

Explanation

Differentiation depends on customers paying a premium that exceeds the added cost of the distinctive features, so the accountant should assess willingness to pay against cost. Across-the-board cuts and routine variances relate to cost control, and statutory reporting is financial accounting.

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