Guide to structure of the syllabus and study guide

Overall aim of the syllabus

This explains briefly the overall objective of the syllabus and indicates in the broadest sense the
capabilities to be developed within the exam.

Relational diagram linking Performance Management (PM) with other ACCA exams

This diagram shows direct and indirect links between this exam and other exams preceding or
following it. It indicates where you are expected to have underpinning knowledge and where it
would be useful to review previous learning before undertaking study.

Main capabilities

The aim of the syllabus is broken down into several main capabilities which divide the syllabus
and study guide into discrete sections.

Relational diagram of the main capabilities

This diagram illustrates the flows and links between the main capabilities (sections) of the
syllabus and should be used as an aid to planning teaching and learning in a structured way.

Syllabus rationale

This is a narrative explaining how the syllabus is structured and how the main capabilities are
linked. The rationale also explains in further detail what the examination intends to assess and
why.

Detailed syllabus

This shows the breakdown of the main capabilities (sections) of the syllabus into subject
areas. This is the blueprint for the detailed study guide.

Approach to examining the syllabus

This section briefly explains the structure of the examination and how it is assessed.

Study Guide

This is the main document that students, education and content providers should use as the
basis of their studies, instruction and materials. Examinations will be based on the detail of the
study guide which comprehensively identifies what could be assessed in any examination
session. The study guide is a precise reflection and breakdown of the syllabus. It is divided into
sections based on the main capabilities identified in the syllabus. These sections are divided
into subject areas which relate to the sub-capabilities included in the detailed syllabus. Subject
areas are broken down into sub-headings which describe the detailed outcomes that could be
assessed in examinations. These outcomes are described using verbs indicating what exams
may require students to demonstrate, and the broad intellectual level at which these may need
to be demonstrated (*see intellectual levels below).

Intellectual Levels
The syllabus is designed to progressively broaden and deepen the knowledge, skills and
professional values demonstrated by the student on their way through the qualification.

The specific capabilities within the detailed syllabuses and study guides are assessed at one of
three intellectual or cognitive levels:

Level 1: Knowledge and

comprehension Level 2: Application and analysis Level 3: Synthesis and
evaluation

Very broadly, these intellectual levels relate to the three cognitive levels at which the Applied
Knowledge, the Applied Skills and the Strategic Professional exams are assessed.

Each subject area in the detailed study guide included in this document is given a 1, 2, or 3
superscript, denoting intellectual level, marked at the end of each relevant line. This gives an
indication of the intellectual depth at which an area could be assessed within the examination.
However, while level 1 broadly equates with Applied Knowledge , level 2 equates to Applied
Skills and level 3 to Strategic Professional, some lower level skills can continue to be assessed
as the student progresses through each level. This reflects that at each stage of study there will
be a requirement to broaden, as well as deepen capabilities. It is also possible that occasionally
some higher level capabilities may be assessed at lower levels.

Learning Hours and Education Recognition

The ACCA qualification does not prescribe or recommend any particular number of learning
hours for examinations because study and learning patterns and styles vary greatly between
people and organisations. This also recognises the wide diversity of personal, professional and
educational circumstances in which ACCA students find themselves.

As a member of the International Federation of Accountants, ACCA seeks to enhance the

education recognition of its qualification on both national and international education
frameworks, and with educational authorities and partners globally. In doing so, ACCA aims to
ensure that its qualifications are recognised and valued by governments, regulatory authorities
and employers across all sectors. To this end, ACCA qualifications are currently recognised on
the education frameworks in several countries. Please refer to your national education
framework regulator for further information.

Each syllabus contains between 20 and 35 main subject area headings depending on the
nature of the subject and how these areas have been broken down.
Guide to ACCA Examination Structure
The structure of examinations varies within and between levels.

The Applied Knowledge examinations contain 100% compulsory questions to encourage

candidates to study across the breadth of each syllabus. These are assessed by a two-hour
computer based examination.

The Corporate and Business Law exam is a two-hour computer-based objective test
examination for English and Global, and available as a paper based version for all variants.

The other Applied Skills examinations (PM, TX-UK, FR, AA, and FM) contain a mix of objective
and longer type questions with a duration of three hours for 100 marks; these questions directly
contribute towards the candidate result. These exams are available in computer-based and
paper-based formats. Prior to the start of each exam there will be time allocated for students to
be informed of the exam instructions.

Computer-based exams

For the Applied Skills (PM, TX-UK, FR, AA and FM) computer-based exams candidates will be
delivered an extra 10 marks of objective test content (either five single OT questions or five OT
questions based around a single scenario), for which candidates are given an extra 20 minutes.
These questions are included to ensure fairness, reliability and security of exams. These
questions do not directly contribute towards the candidate’s score. Candidates will not be able
to differentiate between the questions that contribute to the result and those that do not. All
questions have been subject to ACCA’s regulatory approved quality assurance process.

The total exam time is therefore 3 hours and 20 minutes. Prior to the start of the exam
candidates are given an extra 10 minutes to read the exam instructions.

Paper-based exams

For paper-based exams 15 minutes are added to the three hours to reflect the manual effort
required as compared to computer-based exams. All paper-based and computer-based
questions have been subject to the same quality assurance process. There will be time
awarded by the invigilator to read the exam instructions.

Strategic Business Leader is ACCA’s case study examination at the Strategic Professional level
and is examined as a closed book exam of four hours, including reading, planning and reflection
time which can be used flexibly within the examination. There is no pre-seen information and all
exam related material, including case information and exhibits are available within the
examination. Strategic Business Leader is an exam based on one main business scenario
which involves candidates completing several tasks within which additional material may be
introduced. All questions are compulsory and each examination will contain a total of 80
technical marks and 20 Professional Skills marks. The detail of the structure of this exam is
described in the Strategic Business Leader syllabus and study guide document.

The other Strategic Professional exams are all of three hours and 15 minutes duration. All
contain two Sections and all questions are compulsory. These exams all contain four
professional marks. The detail of the structure of each of these exams is described in the
individual syllabus and study guide documents.

ACCA encourages students to take time to read questions carefully and to plan answers but
once the exam time has started, there are no additional restrictions as to when candidates may
start writing in their answer books.

Time should be taken to ensure that all the information and exam requirements are properly
read and understood.

The pass mark for all ACCA Qualification examinations is 50%.

Guide to ACCA Examination Assessment

ACCA reserves the right to examine anything contained within the study guide at any
examination session. This includes knowledge, techniques, principles, theories, and concepts
as specified. For the financial accounting, audit and assurance, law and tax exams except
where indicated otherwise, ACCA will publish examinable documents once a year to indicate
exactly what regulations and legislation could potentially be assessed within identified
examination sessions.

For examinations, regulation issued or legislation passed on or before 31 August annually,

will be examinable from 1 September of the following year to 31 August of the year after that.
Please refer to the examinable documents for the exam (where relevant) for further
information.

Regulation issued or legislation passed in accordance with the above dates may be examinable
even if the effective date is in the future.

The term issued or passed relates to when regulation or legislation has been formally
approved.

The term effective relates to when regulation or legislation must be applied to an entity
transactions and business practices.

The study guide offers more detailed guidance on the depth and level at which the examinable
documents will be examined. The study guide should therefore be read in conjunction with the
examinable documents list.

Performance management (PM) syllabus and study guide

This syllabus and study guide is designed to help with planning study and to provide detailed
information on what could be assessed in any examination session.

Aim

To develop knowledge and skills in the application of

management accounting techniques to quantitative
and qualitative information for planning, decision-
making, performance evaluation, and control

Relational diagram linking Performance

Management (PM) with other ACCA
exams

This diagram shows direct and indirect links between this exam and other exams preceding or
following it. Some exams are directly underpinned by other exams such as Advanced
Performance Management by Performance Management. These links are shown as solid line
arrows. Other exams only have indirect relationships with each other such as links existing
between the accounting and auditing exams. The links between these are shown as dotted line
arrows. This diagram indicates where you are expected to have underpinning knowledge and
where it would be useful to review previous learning before undertaking study.
Main capabilities
On successful completion of this exam, candidates should be able to:

A Explain and apply cost accounting techniques

B Select and appropriately apply decision-making techniques to facilitate business decisions

and promote efficient and effective use of scarce business resources, appreciating the risks
and uncertainty inherent in business and controlling those risks

C Identify and apply appropriate budgeting techniques and methods for planning and control
and use standard costing systems to measure and control business performance and to
identify remedial action

D Identify and discuss performance management information and measurement systems

and assess the performance of an organisation from both a financial and non-financial
viewpoint, appreciating the problems of controlling divisionalised businesses and the
importance of allowing for external aspects
This diagram illustrates the flows and links between the main capabilities (sections) of the
syllabus and should be used as an aid to planning teaching and learning in a structured way.

Rationale

The syllabus for Performance Management (PM), builds on the knowledge gained in
Management Accounting (MA) and seeks to examine candidates’ understanding of how to
manage the performance of a business. It also prepares candidates for more specialist
capabilities which are covered in Advanced Performance Management (APM).

The syllabus begins by introducing more specialised management accounting topics. There is
some knowledge assumed from Management Accounting (MA) – primarily overhead treatments.
The objective here is to ensure candidates have a broader background in management
accounting techniques.

The syllabus then considers decision-making. Candidates need to appreciate the problems
surrounding scarce resource, pricing and make-or-buy decisions, and how this relates to the
assessment of performance. Risk and uncertainty are a factor of real-life decisions and
candidates need to understand risk and be able to apply some basic methods to help resolve
the risks inherent in decision-making.

Budgeting is an important aspect of many accountants’ lives. The syllabus explores different
budgeting techniques and the problems inherent in them. The behavioural aspects of budgeting
are important for accountants to understand, and the syllabus includes consideration of the way
individuals react to a budget. The preparation of fixed, flexible and incremental budgets is
assumed knowledge from Management Accounting (MA).

Standard costing and variances are then built on. All the variances examined in Management
Accounting (MA) are assumed knowledge in Performance Management (PM). Mix and yield
variances, and planning and operational variances are explored here and the link is made to
performance management. It is important for accountants to be able to interpret the numbers
that they calculate and ask what they mean in the context of performance.

The syllabus concludes with performance management systems, measurement and control.
This is a major area of the syllabus. Accountants need to understand how a business should be
managed and controlled and how information systems can be used to facilitate this. They
should appreciate the importance of both financial and non-financial performance measures in
management. Accountants should also appreciate the difficulties in assessing performance in
divisionalised businesses and the problems caused by failing to consider external influences on
performance. This section leads directly to Advanced Performance Management (APM).

All of the subject areas covered in this syllabus could be examined in either a public sector or
private sector context.
Detailed syllabus D Performance measurement and
control Performance management
A Specialist cost and management
accounting techniques
1.
1. Activity-based costing information systems

2. Target costing Sources of management

2.
information
3. Life-cycle costing
3. Management reports
4. Throughput accounting
4. Performance analysis in private
5. Environmental accounting sector organisations
5. Divisional performance and
B Decision-making techniques
transfer pricing
1. Relevant cost analysis
6. Performance analysis in not-for-
profit organisations and the public
2. Cost volume analysis
sector
3. Limiting factors 7. External considerations and
behavioural aspects
4. Pricing decisions

5. Make-or-buy and other short-term

decisions

6. Dealing with risk and uncertainty in

decision-making

C Budgeting and control

1. Budgetary systems and types of

budget

2. Quantitative analysis in budgeting

3. Standard costing

4. Material mix and yield variances

5. Sales mix and quantity variances

6. Planning and operational variances

7. Performance analysis

Approach to examining the syllabus

The syllabus is assessed by a three-hour examination available in both computer-based and
paper-based formats. *

All questions are compulsory. The exam will contain both computational and discursive
elements.

Some questions will adopt a scenario/case study approach.

Candidates are provided with a formulae sheet.

Computer-based exams

*For computer-based exams an extra 20 minutes is provided to candidates to reflect the

additional content as per below. The total exam time is therefore 3 hours and 20 minutes. Prior
to the start of the exam candidates are given an extra 10 minutes to read the exam instructions.

Section A of the computer-based exam comprises 15 objective test questions of 2 marks

each plus additional content as per below.

Section B of the computer-based exam comprises three questions each containing five
objective test questions plus additional content as per below.

For the computer-based exam candidates will be delivered an extra 10 marks of objective test
content (either five single OT questions OR five OT questions based around a single scenario),
for which candidates are given an extra 20 minutes. These questions are included to ensure
fairness, reliability and security of exams. These questions do not directly contribute towards the
candidate’s score. Candidates will not be able to differentiate between the questions that
contribute to the result and those that do not.

Section C of the exam comprises two 20 mark constructed response questions. The two 20
mark questions will come from decision making techniques, budgeting and control and/or
performance measurement and control areas of the syllabus. The section A questions and the
questions in section B can cover any areas of the syllabus.
Paper-based exams

*For paper-based exams an extra 15 minutes is provided to candidates to reflect the manual
effort required as compared to the time needed for the computer-based exams. The total exam
time is therefore three hours and 15 minutes. Prior to the start of the exam candidates are given
an extra 10 minutes to read the exam instructions.

Section A of the paper-based exam comprises 15 multiple choice questions of 2 marks

each Section B of the paper-based exam comprises three questions containing five multiple
choice questions.

Section C of the exam comprises two 20 mark questions.

The two 20 mark questions will come from decision making techniques, budgeting and control
and/or performance measurement and control areas of the syllabus. The section A questions
and the questions in section B can cover any areas of the syllabus.

Study Guide

A. Specialist cost and management accounting techniques

1. Activity based costing

a) Identify appropriate cost drivers

[1]

under ABC. b) Calculate costs per driver and per

[2]

unit using ABC.

[2]
c) Compare ABC and traditional methods of overhead absorption based on production
units, labour hours or machine hours.

2. Target costing

a) Derive a target cost in manufacturing

[2]

and service industries.b) Explain the difficulties of using target

[2]

costing in service industries.c) Suggest how a target cost gap might

[2]
 be closed.

3. Life-cycle costing

a) Identify the costs involved at

[2]

different stages of the life-cycle.

b) Derive a life cycle cost or profit in manufacturing and service

[2]

industries.c) Identify the benefits of life cycle

[2]

costing.

4. Throughput accounting

a) Discuss and apply the theory of

[2]

constraints.

b) Calculate and interpret a throughput

[2]

accounting ratio (TPAR).c) Suggest how a TPAR could be

[2]

improved.

d) Apply throughput accounting to a multi-product decision-making

[2]

problem.

5. Environmental accounting

[1]
a) Discuss the issues business face in the management of environmental costs.

b) Describe the different methods a business may use to account for its
[1]
 environmental costs.

B. Decision-making techniques

1. Relevant cost analysis

a) Explain the concept of relevant

[2]

costing.

b) Identify and calculate relevant costs for a specific decision situations from
[2]

given data.c) Explain and apply the concept of

[2]

opportunity costs.

2. Cost volume profit analysis

a) Explain the nature of CVP

[2]

analysis.b) Calculate and interpret the break-

[2]

even point and margin of safety.

c) Calculate the contribution to sales ratio, in single and multi-product situations, and
demonstrate an
[2]

understanding of its use.

d Calculate target profit or revenue in b) Explain the price elasticity of
) single and multi-product situations, c) demand.[1] Derive and manipulate a
and demonstrate an understanding d) straight line demand equation.
e of its use.[2] Prepare break even Derive an equation for the total
) charts and profit volume charts and cost function(including volume-
interpret the information contained based discounts).[2] Calculate the
f within each, including multi-product optimum selling price and quantity
) situations.[2] Discuss the limitations for an organisation, equating
of CVP analysis for planning and marginal cost and marginal
decision making.[2] revenue[2]

3 e)
. Evaluate a decision to increase
a Limiting factors Identify limiting production and sales levels,
) factors in a scarce resource situation considering incremental costs,
and select an incremental revenues and other
appropriate technique.[2] factors.[2]
b Determine the optimal production f) Determine prices and output levels
) plan where an organisation is for profit maximisation using the
restricted by a single limiting factor, demand based approach to pricing
including within the context of (both tabular and algebraic
“make” or “buy” decisions.[2]. methods) .[1]

c Formulate and solve multiple scarce g) Explain different price strategies,

) resource problem both graphically h) including:[2] i) All forms of cost-plus
and using simultaneous equations 5. ii) Skimming iii) Penetration iv)
d as appropriate.[2] Explain and Complementary product v)
) calculate shadow prices (dual Product-line vi) Volume discounting
prices) and discuss their implications vii) Discrimination viii) Relevant
e on decision-making and cost Calculate a price from a given
) performance management. [2] strategy using cost-plus and
Calculate slack and explain the relevant cost.[2] Make-or-buy and
implications of the existence of slack other short-term decisions
for decision-making and
performance management.[2]
(Excluding simplex and sensitivity to
changes in objective functions)

4 Pricing decisions Explain the

. factors that influence the pricing of a
a product or service.[2] a) Explain the issues surrounding
) b) make vs. buy and outsourcing
decisions.[2] Calculate and compare
“make” costs with “buyin” costs.[2]
c) Compare in-house costs and activity-base, incremental and
outsource costs of completing tasks feed-forward control.[2]
and consider other issues
surrounding this decision.[2] c) Describe the information used in
budget systems and the sources of
d) Apply relevant costing principles in the information needed.[2]
situations involving shut down, one-
off contracts and the further processing d) Indicate the usefulness and
of joint products.[2] problems with different budget
types
(including fixed, flexible,
6. Dealing with risk and uncertainty zero-based, activity-based,
in decision-making incremental, rolling, top-down,
bottom up, master, functional).[2]
a) Suggest research techniques to
reduce uncertainty e.g. Focus groups, e) Prepare flexed budgets, rolling
market research.[2] budgets and activity based
budgets.[2]
b) Explain the use of simulation,
expected values and sensitivity.[1] f) Explain the beyond budgeting
model, including the benefits and
c) Apply expected values and problems that may be faced if it is
sensitivity to decision-making problems. adopted in an organisation. [2]
[2]

g) Discuss the issues surrounding

d) Apply the techniques of maximax, setting the difficulty level for a
maximin, and minimax regret to budget.[2]
decision-making problems
including the production of profit tables. h) Explain the benefits and difficulties
[2]
of the participation of employees in
the negotiation of targets.[2]
e) Draw a decision tree and use it to
solve a multi-stage decision problem i) Explain the difficulties of changing
a
budgetary system or type of budget
f) Calculate the value of perfect and used.[2]
imperfect information.
j) Explain how budget systems can
C. Budgeting and control deal with uncertainty in the
environment.[2]
1. Budgetary systems and types of 2. Quantitative analysis in
budget budgeting
a) Analyse fixed and variable cost
a) Explain how budgetary systems fit elements from total cost data using
within the performance hierarchy.[2] high/low method.

b) Select and explain appropriate b) Estimate the learning rate and

budgetary systems for an learning effect[2]
organisation, including top-down,
bottom-up, rolling, zero-base,

c Apply the learning curve to a 5. Sales mix and quantity variances

) budgetary problem, including a) Calculate, identify the cause of,
calculations on steady states [2] b) and explain sales mix and quantity
d Discuss the reservations with the variances.[2] Identify and explain the
) learning curve.[2] Apply expected relationship of the sales volume
values and explain the problems and variances with the sales mix and
e benefits.[2] quantity variances.[2]
)

f Explain the benefits and dangers

) inherent in using spreadsheets in Planning and operational
6.
budgeting. [2] variances

3
Standard costing a) Calculate a revised budget.[2]
.
a Explain the use of standard costs.[2]
) b) Identify and explain those factors
that could and could not be allowed
b to revise an original budget.[2]
) Outline the methods used to derive
standard costs and discuss the
different types of cost possible.[2] c) Calculate, identify the cause of and
Explain and illustrate the importance d) explain planning and operational
c of flexing budgets in performance 7. variances for: i) sales, including
) management.[2] Explain and apply market size and market share; ii)
the principle of controllability in the materials; iii) labour, including the
d performance management system.[2] effect of the learning curve.[2]
) Material mix and yield variances Explain and discuss the
Calculate, identify the cause of, and manipulation issues involved in
4 explain material mix and yield revising budgets.[2] Performance
. variances.[2] analysis
a
)

b Explain the wider issues involved in a) Analyse and evaluate past

) changing material mix e.g. cost, b) performance using the results of
quality and performance c) variance analysis.[2] Use variance
c measurement issues.[2] Identify and analysis to assess how future
) explain the relationship of the performance of an organisation or
material usage variance with the business can be improved.[2]
material mix and yield variances.[2] Identify the factors which influence
behaviour.[2]
d Suggest and justify alternative
) methods of controlling production
processes.[2]

d) Discuss the effect that variances have on staff motivation and

[2]

action.

e) Describe the dysfunctional nature of some variances in the modern

[2]

environment of JIT and TQM.

f) Discuss the behavioural problems resulting from using standard costs

[2]

in rapidly changing environments.

D. Performance measurement and control

1. Performance management information systems

a) Identify the accounting information requirements and describe the different types of
information systems used for strategic planning, management control and operational
control and decision-
[2]

making.

b) Define and identify the main characteristics of transaction processing systems;

management information systems; executive information systems; and enterprise
[2]

resource planning systems.

c) Define and discuss the merits of, and potential problems with, open and closed systems
with regard to the needs of
[2]

performance management.

2. Sources of management information

a) Identify the principal internal and external sources of management

[2]

accounting information.

b) Demonstrate how these principal sources of management information might be used for
control
[2]
purposes.
 [2]
c) Identify and discuss the direct data capture and process costs of management accounting
information.

d) Identify and discuss the indirect

[2]

costs of producing information.

e) Discuss the limitations of using

[2]

externally generated information.

3. Management reports

[2]
a) Discuss the principal controls required in generating and distributing internal
information.
[2]
b) Discuss the procedures that may be necessary to ensure security of highly confidential
information that is not for external consumption.

4. Performance analysis in private sector organisations

[2]
a) Describe, calculate and interpret financial performance indicators (FPIs) for profitability,
liquidity and risk in both manufacturing and service businesses. Suggest methods to
improve these measures.

[2]
b) Describe, calculate and interpret non-financial performance indicators (NFPIs) and
suggest methods to improve the performance indicated.

[2]
c) Analyse past performance and suggest ways forimproving financial and non-financial
performance.
d Explain the causes and problems c) Explain how performance could be
) created by short-termism and d) measured in this sector.[2] Outline
financial manipulation of results and Value for Money (VFM) as a public
suggest methods to encourage a sector objective.[1]
long term view.[2]
e Explain and interpret the Balanced e) Describe, calculate and interpret
) Scorecard, and the Building Block f) non-financial performance
f model proposed by Fitzgerald and g) indicators (NFPIs) and suggest
) Moon.[2] Discuss the difficulties of methods to improve the
5 target setting in qualitative areas.[2] performance indicated.[2] Discuss
. Divisional performance and the difficulties of target setting in
a transfer pricing Explain and qualitative areas.[2] Analyse past
) illustrate the basis for setting a performance and suggest ways for
transfer price using variable cost, improving financial and non-
full cost and the financial performance.[2]

principles behind allowing for h) Explain the causes and problems

intermediate markets.[2] Explain how created by short-termism and
b transfer prices can distort the financial manipulation of results
) performance assessment of and suggest methods to
divisions and encourage a long term view.[2]

decisions made.[2] 7. External considerations and

c behavioural aspects Explain the
) need to allow for external
Explain the meaning of, and
considerations in performance
calculate, Return on Investment
a) management, including
(ROI) and Residual Income (RI),
stakeholders, market conditions
and discuss their shortcomings.[2]
and allowance for

d Compare divisional performance competitors.[2] Suggest ways in

) and recognise the problems of doing which external considerations
so.[2] could be allowed for
b)
6 Performance analysis in not for in performance management.[2]
. profit organisations and the Interpret performance in the light of
c)
public sector external considerations.[2]

a Comment on the problems of having d) Identify and explain the behaviour

) non-quantifiable objectives in aspects of performance
b performance management.[2] management.[2]
) Comment on the problems of having
multiple objectives in this sector.[2]
Summary of changes to Performance Management (PM)
ACCA periodically reviews its qualification syllabuses so that they fully meet the needs of
stakeholders such as employers, students, regulatory and advisory bodies and education
providers.

The main areas of change to the syllabus are summarised in the table below.