Technical articles

A library of articles to help you develop broader insight into the subject, split by syllabus section.

Information, technologies and systems for organisational performance (A)

Big data 1: What is big data?
Big data is part of the Performance Management syllabus. But what exactly is big data?

Big data 2: How companies use big data
This article will describe some real life examples of the use of big data for performance management and measurement purposes.

Information systems
Information systems (IS) is a topic you need to be ready for in all sections of the Performance Management exam. The examiner reports state that students regularly overlook this area of the syllabus, so make sure you cover it during your studies.

Specialist cost and management accounting techniques (B)

Activity-based costing
ABC undoubtedly requires an organisation to spend time and effort investigating more fully what causes it to incur costs, and then to use that detailed information for costing purposes.  

Target costing and lifecycle costing
An explanation of target costing and lifecycle costing, with examples as to how and when you would use these costing techniques. 

Throughput accounting and the theory of constraints – part 1
In the first of two articles, we look at the basic principles of the theory of constraints and throughput accounting.

Throughput accounting and the theory of constraints – part 2
A follow-up to the first part of this article featuring a discussion on the five focusing steps of the theory of constraints, with examples of how these steps might be applied in practice or in the exam. 

Environmental management accounting
Also available as a podcast on iTunes
Environmental management accounting is part of the Performance Management syllabus and requires students to describe the issues businesses face in managing environmental costs, and the different methods they may use to account for these. 

Decision-making techniques

Pricing 1: Theoretical aspects
This article deals with the theoretical aspects of pricing and a second article deals with practical pricing.

Pricing 2: Practical aspects
This article deals with practical pricing approaches.

Relevant costs
This article looks at relevant costs, which can be defined as any cost relevant to a decision. 

Cost-volume-profit analysis
Cost-volume-profit analysis allows a business to find its break-even point.

Linear programming 
A simple example to illustrate the decision-making technique of linear programming.

The risks of uncertainty
Decisions, decisions – risk, probability and potential outcomes unravelled.

Decision trees
The addition of decision trees to the Performance Management syllabus is a relatively recent one. This article provides a step-by-step approach to decision trees, using a simple example to guide you through.

Budgeting and control (D)

Time series and moving averages
This article looks at time series analysis, which can be used to analyse historic data and establish any underlying trend and seasonal variations within the data.

Regression and correlation
This article looks at how the relationships between variables can be analysed using the ‘line of best fit’ method and regression analysis, and how the strength of these relationships can be measured using correlation.

All about budgeting - part 1part 2part 3part 4part 5 This series of articles covers the budgeting approaches flexible budgeting, activity-based budgeting, rolling budgeting, zero-based budgeting, and beyond budgeting.

Comparing budgeting techniques (incremental v ZBB) in the public sector 
Also available as a podcast on iTunes
This article critically evaluates the two main methods for preparing budgets - the incremental approach and the zero-based approach.

The learning rate and learning effect
The purpose of this article is to summarise the history of the learning curve effect and help candidates understand why it is important, as well as looking at what past learning curve questions have required of candidates and to clarify how future questions may go beyond this.

Materials mix and yield variances
This article explains the theory behind mix and yield variances, and provides examples of how to use them in an exam.

 

Performance measurement and control (E)

Balanced scorecard
For a profit-seeking company, sustained financial success and long-term shareholder value are the ultimate objectives and the balanced scorecard suggests how this might be achieved

Building blocks of performance management
Performance management – the processes that ensure organisations meet their objectives – is core to the Performance Management syllabus, and understanding modern performance measurement systems is an important area within this topic. This article reviews the importance of the modern approach to performance measurement, discusses the Building Block model, and applies this model to an exam-based scenario.

Decentralisation and the need for performance measurement
This article focuses on a classic performance measurement question, which involves a combination of financial and non-financial analysis.

Transfer pricing
The purpose of this article is to strip transfer pricing back to the basics and consider, first, why transfer pricing is important; secondly, the general principles that should be applied when setting a transfer price; and thirdly, an approach to tackle exam questions in this area, specifically the question from June 2014’s exam.

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