ACCA Strategic Professional · Advanced Performance Management · Strategic management accounting
Brindle Telecom's board receives a 60-page monthly pack of historical financial variances. Management accountant Priya suggests replacing it with a short dashboard using real-time customer churn data, forecasts of customer lifetime value and scenario analysis, accepting that some figures will be estimates rather than audited actuals. Which statement BEST evaluates her proposal against the aims of strategic management accounting?
The proposal fits strategic management accounting because decision usefulness and forward-looking relevance matter more than the precision of historical, audited figures. Estimates such as churn forecasts and customer lifetime value are acceptable provided their uncertainty is communicated clearly to the board, and financial measures need not be removed.
- AIt is consistent with those aims because decision usefulness and relevance to future strategy outweigh precision of historical data, provided estimate uncertainty is clearly communicatedCorrect
- BIt is inconsistent because management reports must always be reconciled to audited figures before use
- CIt is inconsistent because strategic management accounting only deals with long-term capital budgeting
- DIt is consistent only if all financial measures are removed from the dashboard
Explanation
Strategic management accounting emphasises relevance, timeliness and forward-looking information for decisions, so estimates are acceptable if limitations are disclosed. Management information need not be audited or tied to statutory figures. It is not restricted to capital budgeting, and financial measures do not need to be removed.
Did you get it right without looking?
One question tells you little. A timed set on Strategic management accounting shows your real accuracy, how long you take and where you lose marks.
More Strategic management accounting questions
- Dalen Retail, a high-street clothing chain, has been told by its board to avoid being 'stuck in the middle'. Its prices are slightly above d…
- Kestrel Devices uses target costing for a new smartwatch. Market research shows customers will pay $200 and the required margin is 25% of se…
- Orlin Manufacturing is deciding how to use predictive analytics on machine sensor data. Which application is an example of predictive rather…
- Calder Retail uses a balanced scorecard and a value chain analysis. Management finds that its logistics activity costs 14% of sales versus 9…
- Wexford Pharma's board wants the management accounting team to act as a business partner rather than a scorekeeper. Which activity would bes…
- Brindle Foods, a packaged snack manufacturer, has historically reported only variance analysis from its cost ledgers. The new finance direct…