ACCA Strategic Professional · Advanced Performance Management · Strategic management accounting
Harlow Retail plc's management accountant has traditionally reported monthly variances against budget for each store. The new finance director wants the function to add information on competitor pricing, customer retention trends and the long-term profitability of customer segments. Which description best explains why this change moves the function towards strategic management accounting?
The change reflects strategic management accounting because it brings in external, forward-looking information such as competitor pricing and customer segment profitability. This supports strategic positioning and long-term decisions, rather than only controlling internal costs through historical variance reporting against budget.
- AIt widens the focus to external and forward-looking information used to support strategic positioning, not just internal historical cost controlCorrect
- BIt replaces budgetary control with statutory financial reporting to shareholders
- CIt limits reporting to non-financial data so that financial measures no longer influence decisions
- DIt concentrates on calculating product costs more precisely for inventory valuation
Explanation
Strategic management accounting extends traditional internal, historical, short-term reporting to include external, competitor and customer information with a long-term orientation. The new data supports strategy choices. Option 2 describes financial accounting, and option 3 wrongly drops financial data, while option 4 is a traditional costing purpose.
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
- Marlow Telecom wants to sustain advantage by tracking how its costs and margins compare across each activity from design to after-sales serv…
- Zentra plc has net operating profit after tax (NOPAT) of $18.0m. Its capital employed is $120m and its weighted average cost of capital is 9…
- Brindle Foods, a packaged snack manufacturer, has historically reported only variance analysis from its cost ledgers. The new finance direct…
- Orlin Components makes two products using activity-based costing. Product X is made in large batches and Product Y in small, complex batches…
- Brindle Retail's directors say that low cost alone no longer protects it, and they ask the management accountant to monitor whether its prod…
- Orchid Pharma's board is concerned that its management accounting information focuses only on short-term profit and cost per unit, so manage…