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Answers - ACCA Global
AnswersProfessional Level Options Module, Paper P5 Advanced Performance ManagementSeptember/December 2015 Answers1 ReportTo: Board of Iron Chicken (IC)From: A. AccountantDate: December 2015 Subject: Performance management issues at ICIntroductionThis report evaluates the accuracy and assumptions used in the calculation of EVA . It then suggests new KPIs for the currentCSFs at IC. Finally it considers the impact of three quality improvement projects on these CSFs and a proposed new informationsystem.(i)Economic value added (EVA )There are a number of errors in the existing calculation of (EVA ). These are described below and then the corrected EVA is expenses are correctly added back to profit as such costs are treated as unacceptable accounting adjustments ona cash-based view. Marketing activities for long-term benefit are correctly added back as they generate future value for thebusiness and so the prior year expenditure is also added in to capital employed. Operating leases should be added back toprofit and to capital employed and a suitable additional depreciation charged as these are now treated as assets of thebusiness.
Professional Level – Options Module, Paper P5 Advanced Performance Management September/December 2015 Answers 1 Report To: Board of …
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