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ACCA Strategic Professional · Advanced Performance Management · Strategic management accounting

Veldt Components manufactures specialised valves. Its management accountant compares Veldt's unit costs, market share trends and pricing with those of its three main rivals, using publicly available data and estimates of rival cost structures. Which strategic management accounting technique is Veldt primarily applying?

Veldt is applying competitor accounting. This technique gathers and analyses information about rivals' costs, prices, volumes and market share, often from public sources, so management can judge relative competitive position. The other options focus on internal cost control or budgeting rather than external competitor analysis.

  1. ACompetitor accountingCorrect
  2. BStandard costing variance analysis
  3. CZero-based budgeting
  4. DAbsorption costing of overheads

Explanation

Competitor accounting involves analysing rivals' costs, prices, volumes and market share, usually from external information, to inform strategy. Standard costing variances and absorption costing look inward at Veldt's own costs, and zero-based budgeting is a budgeting method.

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