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ACCA Strategic Professional · Advanced Performance Management · Strategic management accounting

Calder Telecom is deciding whether to launch a low-price mobile plan. The management accountant proposes analysing competitor cost structures estimated from public filings, then assessing how rivals would likely respond to the price. Which feature of strategic management accounting does this primarily illustrate?

It illustrates competitor accounting. The management accountant estimates rivals' cost structures and likely responses to inform the pricing and strategic decision, which is a core external-focus feature of strategic management accounting rather than internal costing or statutory reporting.

  1. ACompetitor accounting, using estimates of rivals' costs and behaviour to inform strategyCorrect
  2. BAbsorption costing of fixed overheads to the new plan
  3. CZero-based budgeting of the marketing department
  4. DPreparation of a statement of cash flows under IAS 7

Explanation

Competitor accounting involves assessing rivals' costs, prices, volumes and likely reactions to support strategic positioning. Absorption costing, zero-based budgeting and IAS 7 statements do not involve analysing competitors.

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