ACCA - P5 Advanced Performance Management

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EXAMINER’S COMMENTS

 Accountancy Tuition Centre (International Holdings) Ltd 2009 0407

provide an answer here which was worth a potential five

marks

Question 4

Answers were generally poor due to the fact that the majority

of candidates who could answer part (a) to a satisfactory

standard could not answer part (b) in a similar manner

Candidates’ answers to part (a) demonstrated that they either

did or didn’t understand the fundamental principles of

“Transfer Pricing”. In part 4(a) (i) a large number of

candidates did not set out fully the principles on which

Division B and Division C would make pricing decisions. In

part 4(a) (ii) many candidates only summarised the position

for Division C and omitted comment on Division B.

Answers to part (b) varied most significantly. A significant

number of candidates scored maximum marks. However,

most alarming is the fact that a large number of candidates

did not have an awareness of “quality costs” (which was a

syllabus area examined in the previous diet), chose to guess

as to their “identification” and examples there of and scored

few or even no marks as a consequence. I cannot help but

wonder if this is a classic example of “question spotting”

with this topic being ignored by candidates because it

featured on the previous P5 examination paper.

Question 5

In general, the answers to this question were very poor.

In their answers to part (a) a minority of candidates were able

to calculate correctly the ABC costs for direct materials and

direct labour for each product. A much smaller number of

candidates were able to calculate correctly the material and

labour related overheads in respect of the products.

Rather alarmingly a significant number of candidates did not

understand how to calculate the contribution to sales ratio for

the two products as required by part (b).

In their answers to part (c) the vast majority of candidates

discussed the adoption of activity-based costing (ABC) as

opposed to Activity-based management (ABM) and in doing

so not only failed to achieve some relatively easy marks but

also sacrificed precious examination time. again, many

candidates did not provide any answer here which was for six

marks.

EXAMINER’S COMMENTS

 Accountancy Tuition Centre (International Holdings) Ltd 2009 0408

JUNE 2008 – EXAMINER’S REPORT

The examination paper comprised two sections, A and B.

Section A consisted of two compulsory questions for 36 and

24 marks respectively. Section B consisted of three optional

questions for 20 marks each from which candidates were

required to answer two questions.

The overall results for this paper suggest that fewer

candidates than usual performed well for this examination

with the spread of marks indicating that a smaller percentage

of candidates achieved over 60 marks.

Many candidates did not answer all of the question

subsections and in not doing so imposed limitations on the

marks available to them.

The consensus of opinion from the marking team was that the

paper provided the opportunity to obtain relatively high

marks. However, the examination revealed a large number of

candidates who performed poorly. The overall results for this

diet were not pleasing.

Question 1

There were very few good answers to question 1.The vast

majority of candidates were unable to provide answers to all

of the question’s subsections. 4 professional marks were

allocated to this question in respect of the appropriateness of

format, style and structure of their report but a large number

of candidates were unable to gain these marks.

The requirement of part (a)(i) revealed a very large number

of candidates who could not provide a commentary on,

and/or a detailed calculation of economic value added

(EVA), which together were potentially worth 7 marks.

Moreover, few candidates were able to calculate correctly the

sensitivity analysis calculations required by part (a) (ii) of the

question. In dealing with requirement (a) (iii) many

candidates simply summarised the key arguments of writers

such as Fitzgerald and Moon but failed to apply these to the

scenario thereby producing answers that would be of little

value to readers of this part of the report.

In part (b) most candidates were able to identify problems

that the directors of HFG might experience in their wish to

benchmark the performance of HFC with SFC. However, in

general, candidates had problems in suggesting appropriate

recommendations as to how those problems might be

successfully addressed.

EXAMINER’S COMMENTS

 Accountancy Tuition Centre (International Holdings) Ltd 2009 0409

Question 2

There were some very good answers to parts (a), (b) and (c)

of this question and it was pleasing to see the majority of

candidates producing satisfactory answers. Weaker answers

tended to ignore the scenario contained within the question or

simply did not address the requirements of each part of the

question.

Some answers were very long though most were satisfactory.

However candidates should be mindful that it is the “quality”

of an answer and not the “quantity” of an answer which is

awarded credit.

Question 3

This was the most popular of the option questions with many

candidates producing good answers to both parts of the

question. Part (a) was generally well answered. Poorer

answers to part (a) were often reduced to bullet points with

little or no development. Whilst Part (a) was generally well

answered, there was a significant variation in the quality of

answers to part (b).Poorer answers invariably ignored the

scenario contained in the question.

Question 4

The majority of candidates provided a satisfactory answer to

parts (a) (i) and (ii) of this question. Whilst many candidates

also provided a good answer to part (b) (i), a large number of

candidates made no attempt whatsoever to provide an answer

to part (b) (ii) which was potentially worth 4 marks. Many

candidates who did attempt part (b) (ii) did not undertake a

DCF analysis regarding the introduction of “Nellie the

Elephant” even though the need for one was clearly signalled

by the inclusion of multiple years, end of year cash flows and

the provision of the cost of capital.

There was a significant variation in the quality of answers to

part (b) (iii). Again, poorer answers tended to ignore the

scenario contained in the question.

Question 5

This was the least popular choice from among the option

questions. However, when attempted, the question produced

some excellent answers which earned very high marks. In

general answers to part (a) were satisfactory. Poorer answers

demonstrated confusion regarding the different categories of

quality costs. There was a significant variation in the quality

of answers to part (b) with a number of candidates achieving

maximum marks for a correct solution. However, there was

also a number of unsatisfactory answers which invariably

comprised poorly laid out, incorrect calculations.

EXAMINER’S COMMENTS

 Accountancy Tuition Centre (International Holdings) Ltd 2009 0410

DECEMBER 2007 – EXAMINER’S REPORT

Firstly I would like to offer my congratulations to all of those

candidates who achieved a pass at this diet and my

commiserations to those who did not.

The examination paper comprised two sections, A and B.

Section A consisted of two compulsory questions for 35 and

25 marks respectively. Section B consisted of three optional

questions for 20 marks each from which candidates were

required to answer two questions.

It was pleasing to see a significant number of candidates

providing good answers to every question they attempted and

consequently achieving high marks.

Sadly, the examination also revealed a large number of

candidates who seemed inadequately prepared for the

examination. Nevertheless it was pleasing to observe that

only a relatively small number of candidates scored very low

marks. In general, the overall performance of candidates was

good.

Many candidates who clearly had knowledge of the areas of

the syllabus which featured within the examination questions

were unable to achieve a pass at this diet as a consequence of

poor examination technique which frequently manifested

itself via poor presentation and/or time management or not

observing the specific requirements of each question.

Well-prepared candidates invariably provided concise

workings which arrived at the correct solutions to the

computational parts of the examination paper. However, a

significant number of candidates produced workings, notably

in their answers to part (a) of Question 1, which were and

difficult to follow. The need for candidates to give more

thought to the layout and organisation of their answers is of

paramount importance. This is especially the case now that

“professional marks” might be awarded for well- presented

answers.

Rather surprisingly, a number of candidates ignored the

advice given in previous examiner’s reports that each

question should be started on a new page in their answer

booklet(s) and that there should be clear labelling to indicate

which questions are being attempted.

It was pleasing to observe that the vast majority of candidates

attempted all four questions. However, there was some

evidence of poor time management, particularly affecting

Question 1 which a significant number of candidates

attempted as their final question.

The poor performance of many candidates was exacerbated

by a clear failure to carefully read the content and

requirements of questions. This contributed to some poor

performances in both the computational and discursive parts

of questions.

EXAMINER’S COMMENTS

 Accountancy Tuition Centre (International Holdings) Ltd 2009 0411

Question 1

A large number of candidates produced good answers to each

part of question 1 and consequently achieving a high mark.

However, it was noticeable that there were significant

variations in the quality of candidates’ answers to this

question. Most candidates managed to score well in part (a),

although a number of candidates ignored the requirement to

include an appendix to the report showing detailed workings

of how each of the six figures marked with an asterisk in note

1 had been calculated. Indeed, many candidates simply

reproduced the performance data provided in note (1) of the

question.

In general, answers to part (b) were good although a number

of candidates provided poor examples of additional

information that would be of assistance in assessing the

financial and operating performance of GBC and TTC.

The quality of answers to part (c) varied significantly. A

large number of candidates achieved very high marks.

However, it was disappointing to observe the significant

number of candidates who made no attempt whatsoever to

provide an answer to part (c) which potentially was worth six

marks. It was noticeable that virtually all candidates who

attempted this part of the question received some credit.

Question 2

It was noticeable that a large number of candidates did not

attempt all parts of this question. Answers to part (a) (i) were

either very good or very poor. Answers to part (a) (ii) were

often too superficial.

A number of candidates provided a correct solution to part

(b) (i) and therefore achieved maximum marks. It was (again)

very disappointing to observe the significant number of

candidates who made no attempt whatsoever to provide an

answer to this part of the question which potentially was

worth eight marks.

Also frustrating was the significant number of candidates

who provided “advantages” of using EVATM in the

measurement of financial performance when Part (b) (ii)

required a brief discussion of “disadvantages”.

Question 3

There were a large number of correct solutions to part (a) of

the question. However, it was disappointing to observe an

equally large number of incorrect solutions.

In their answers to part (b) most candidates were able to

explain three critical success factors and a significant number

of candidates discussed five (CSFs) as required. Answers to

part (c) varied significantly. The better answers produced by

candidates were not only high in quality but were also

EXAMINER’S COMMENTS

 Accountancy Tuition Centre (International Holdings) Ltd 2009 0412

concise. Poorer answers, which were often quite lengthy,

resulted from the “scattergun” approach adopted by

candidates.

Question 4

This proved to be the least popular choice among the optional

questions contained in Section B of this examination paper.

In general, those candidates who chose to answer this

question provided satisfactory answers. Many candidates

provided a correct solution to part (a) and achieved

maximum marks. Regrettably, many candidates ignored the

information on batches and therefore arrived at incorrect

solutions. Answers to part (b) were invariably of a

satisfactory nature and many candidates provided very good

answers to part (c).

Question 5

Part (a) was generally well answered with a significant

number of candidates achieving maximum marks. However,

many candidates who could describe Porter’s five forces

model were unable to apply it to the scenario contained

within the question. Answers to part (b) were generally not as

good as those to part(a). A significant number of candidates

did not observe the requirement to discuss performance

indicators which might indicate that JOL Co might fail as a

corporate entity, but discussed the use of performance

indicators in a more general sense.

JUNE 2007 – EXAMINER’S COMMENTS

Note: Comments made for the June 2007 and earlier exams

were based on the old 3.3 syllabus. However, Shane

Johnson, the examiner for P5 was also the examiner for

3.3, so the comments do show the things that he likes

and dislikes.

General Comments

The exam paper comprised two sections, A and B. Section A

consisted of two compulsory questions for 45 and 15 marks

respectively. Section B consisted of three optional questions

for 20 marks each, from which candidates were required to

answer two.

It was pleasing to see a large number of candidates providing

very good answers to every question they attempted and

consequently achieving high marks. Sadly, the exam also

revealed a large number of candidates who were inadequately

prepared. Nevertheless, it was pleasing to observe that only a

relatively small number of candidates scored very low marks.

In general, the overall performance of candidates was better

than in recent diets.

Many candidates who clearly had knowledge of the syllabus

areas featured in the exam questions were unable to achieve a

pass at this diet as a consequence of poor technique. This was

frequently shown by poor presentation and/or time

EXAMINER’S COMMENTS

 Accountancy Tuition Centre (International Holdings) Ltd 2009 0413

management, or by not observing the specific requirements

of each question.

Well-prepared candidates invariably provided concise

workings which arrived at the correct solutions to the

computational parts of the exam paper. However, a

significant number of candidates produced workings which

were difficult to follow, and displayed their answers poorly.

Therefore, it is vital that candidates give more thought to the

layout and organisation of their answers. This was

particularly the case with regard to Question 1. Valuable time

was spent in the production of pages of workings to arrive at

solutions to calculations – such as those required in Parts (a)

of Questions 1, 2, and 4 – when that time might have been

better employed elsewhere.

Frustratingly, a number of candidates also ignored the advice

given in previous examiner’s reports that each question

should be started on a new page in their answer booklet(s),

and that there should be clear labelling to indicate which

questions are being attempted.

Most candidates attempted all four questions although there

was some evidence of poor time management, particularly

affecting Questions 1 and 2, which a large number of

candidates attempted as their final question.

The poor performance of many candidates was once again

exacerbated by a clear failure to carefully read the content

and requirements of questions. This contributed to some poor

performances in the computational and discursive parts of

each question.

Question 1

A large number of candidates produced good answers to each

part of Question 1 and consequently achieved a high mark.

However, it was noticeable that there were significant

variations in the quality of candidates’ answers to this

question. Most candidates managed to score well in Part (a),

where a significant proportion of candidates achieved

maximum marks. In Parts (b) and (c), many candidates did

not contextualise and make use of the data provided in the

question. The answers of such candidates were confined to a

superficial comparison between HLP and MAS. When asked

to comment on performance, many candidates stated their

observations in terms of “higher than” or “lower than” (for

example, five is more than four, or six is less than seven).

Other answers considered absolute numbers rather than

relative numbers and therefore did not address the main

issues required in Parts (b) and (c).

Candidates’ answers to Part (d) varied significantly. While it

was pleasing to observe that a large number of candidates

commented on the “ethical” dimension of the managing

director’s statement, it was disappointing that a large number

of candidates ignored it. Many answers were written as if the

EXAMINER’S COMMENTS

 Accountancy Tuition Centre (International Holdings) Ltd 2009 0414

managing partner’s statement would involve simply

increasing the charge to clients. Many candidates were at

least able to identify that the suggestion might cause quality

and consultant morale problems, but few included any

discussion of the possible importance of non-chargeable

tasks (such as training), and very few showed any

appreciation that higher utilisation rates could reduce the

requirement for subcontractors. Given that there were six

marks on offer, it was also disappointing to observe that

many answers provided were confined to one or two very

brief comments.

Given the continual mantra for the accounting specialist to

“add value”, such requests for “comments” really need to

bring out some relationship (or possible relationship)

suggested by the data rather than to simply replicate the

numbers as words. That said, it was encouraging to see that

many candidates could argue the significance of quality in

the determination of commercial success.

Question 2

In general, this question was poorly answered. Many

candidates applied a process of uplifting annual future cash

flows to take into account inflation, and although this method

can be used to produce correct NPV calculations, it is more

time consuming than the alternative annuity-based approach.

There was some evidence that the necessary time spent due

to this affected the performance of a number of candidates in

later questions. The entire marking team expressed their

disappointment with the fact that a large number of

candidates were unable to perform the calculations which

were required in Parts (b) and (c) of the question. The quality

of answers to Parts (b) and (c) varied significantly. It was

apparent that, in general, candidates struggled with the

application of sensitivity analysis to the different aspects of

the project under consideration. Furthermore, it was

noticeable that a large number of candidates made no attempt

whatsoever at Parts (b) (i) and (ii), and Part (c), suggesting

that they had not studied sensitivity analysis. In general,

answers to Part (d) were satisfactory; most candidates were

able to identify three relevant factors. Weaker answers

simply suggested three other investment appraisal

techniques.

Question 3

This question produced some very good answers. However, a

significant number of candidates did not address the specific

requirements of Part (a) and simply provided detailed

accounts of how each director should run their department.

Other poorer answers ignored the requirement relating to

“criteria” and simply listed performance measures, which

frequently were not quantitative in nature. Part (b) of this

question was less well answered than Part (a). Many

candidates did not recognise that there were two sub

EXAMINER’S COMMENTS

 Accountancy Tuition Centre (International Holdings) Ltd 2009 0415

requirements to this part and failed to address one or the

other completely. A common failing was attempting to make

the answer more complex than was needed. Use of BCG

and/or Ansoff rarely scored more marks than more

straightforward answers. In their answers to Part (b), many

candidates did not answer the question which was asked.

Also, there was little, if any, critical thinking demonstrated in

a significant number of answers. Candidates are reminded

that this exam is set at a Masters level, where candidates are

rewarded for the application of knowledge in the main.

Answers which ignore the scenario contained within a

question, and merely “describe”, will therefore struggle to

achieve a pass standard.

Question 4

Answers to Part (a) were either very good or very poor. It

was noticeable that a significant number of candidates did

not recognise that there were 12 possible outcomes of annual

contribution for HFL, which led them to produce poor

answers. There appeared to be many instances of confusion

regarding the calculation of expected values. However, this is

a significant topic within the syllabus with which candidates

should be familiar – especially as expected values form the

basis of real-life managerial decisions. Where provided,

answers to Part (b) were, as might be expected, very good or

very poor. Answers to Part (c) were generally poor with a

minority of candidates focusing on rational reasons why HFL

might purchase 100% of the output of OML.

Question 5

The standard of answers to Parts (a) and (b) varied

considerably. In Part (a), many candidates chose to describe

the balanced scorecard and made no reference to either

advantages or limitations relating to its use. Rather

worryingly, a significant number of candidates stated that the

balanced scorecard was easy to explain to both management

and employees, and that this therefore was an advantage

arising from its use.

In Part (b) (i), a memorandum format was required and a

mark was available for complying with the requirement and

yet it was surprising how many candidates ignored this fact.

Many candidates did not attempt to construct a balanced

scorecard and made very little use of the data provided within

the question. Also, surprisingly few candidates considered

the cash flow measure specifically required. On the other

hand, many candidates were able to provide goals, measures,

and statistics for other aspects of the financial perspective

and the other three perspectives. Answers to Part (b) (ii)

contained relatively few focused examples of other

performance measures for the customer perspective of the

balanced scorecard.

EXAM TECHNIQUE

 Accountancy Tuition Centre (International Holdings) Ltd 2009 0501

EXAM TECHNIQUE

Overall

1. Plan your approach to the exam before you get there i.e.

decide if you would attempt Section A first, while you

are feeling fresh, or whether you prefer to start with a

shorter Section B question to get you into the exam.

(The former is probably the best approach, but if you

suffer from exam nerves, the latter may be more

appropriate. This is personal choice.)

2. Read through the paper during the reading and planning

time, and decide which order to do the questions in.

3. Using the golden rule of 1.8 minutes per mark, plan

your exam time. Write down on the front of the

question paper what time you will start each question,

and what time you will finish. Don’t overrun.

4. Spend some time thinking about your approach to each

question before writing. A written plan is not necessary

(and you may not have time to do this anyway) but a

few minutes thinking is worth a lot.

5. Never get bogged down in calculations at the expense

of the written sections of a question. In P5, the

examiner does not reward calculations as generously as

he rewards discussion- so make sure you leave time for

the discussion.

6. Always use information given in scenarios- the

examiner puts the information there for a reason.

Approach to the long section A questions

1. Read the requirements of all parts of the question. (This

is to ensure that an answer is not written for part (a)

which would actually be more appropriate to part (d).

2. Read the scenario once. At this stage, not much will be

absorbed, but it gives an idea of the scope of the

question.

3. Read the scenario again- underline key facts.

Reference paragraphs to the various parts of the

question, and link paragraphs which include info which

should be used together.

4. Think about your approach to each part. What

calculations will be required for the numerical parts?

Where will the information come from? Is there a short

cut? Is all the information available? (There probably

won’t be time for a written plan.) For discussion

questions, work on the basis of one mark per point

made. What points will you make? Are there any clues

in the question?

ACCA - P5 Advanced Performance Management - Passport ATC 2009

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