ExpertHard10 marksStructured
ACCA · Question 38 · Performance measurement
SECTION B - MULTI-TASK QUESTION 3 (PERFORMANCE MEASUREMENT)
Scenario: CareFirst NGO provides mobile healthcare clinics in rural areas. The board is reviewing performance for the year using a mix of financial and non-financial metrics.
Data for the year:
- Total funding received: $2,000,000
- Total operating costs: $1,800,000
- Number of clinics operated: 50
- Total patients treated: 100,000
- Target patients treated: 120,000
- Number of patient complaints: 500
- Total capital employed (vehicles/equipment): $5,000,000
Answer the following 5 sub-questions (2 marks each):
- Calculate the Return on Capital Employed (ROCE) based on the operating surplus.
- Calculate the cost per patient treated.
- What is the percentage shortfall in effectiveness regarding the target number of patients treated?
- Calculate the complaint rate per 1,000 patients treated.
- If CareFirst negotiated a 10% discount on medical supplies this year, which of the '3 Es' (Economy, Efficiency, Effectiveness) does this directly improve?
SECTION B - MULTI-TASK QUESTION 3 (PERFORMANCE MEASUREMENT)
Scenario: CareFirst NGO provides mobile healthcare clinics in rural areas. The board is reviewing performance for the year using a mix of financial and non-financial metrics.
Data for the year:
- Total funding received: $2,000,000
- Total operating costs: $1,800,000
- Number of clinics operated: 50
- Total patients treated: 100,000
- Target patients treated: 120,000
- Number of patient complaints: 500
- Total capital employed (vehicles/equipment): $5,000,000
Answer the following 5 sub-questions (2 marks each):
- Calculate the Return on Capital Employed (ROCE) based on the operating surplus.
- Calculate the cost per patient treated.
- What is the percentage shortfall in effectiveness regarding the target number of patients treated?
- Calculate the complaint rate per 1,000 patients treated.
- If CareFirst negotiated a 10% discount on medical supplies this year, which of the '3 Es' (Economy, Efficiency, Effectiveness) does this directly improve?
How to approach this question
1. Surplus = Funding - Costs. ROCE = Surplus / Capital.
2. Total Costs / Total Patients.
3. (Target - Actual) / Target * 100.
4. (Complaints / Total Patients) * 1000.
5. Definition of Economy (cost of inputs).
Full Answer
1. Operating Surplus = $2,000,000 - $1,800,000 = $200,000. ROCE = $200,000 / $5,000,000 = 0.04 or 4%.
2. Cost per patient = $1,800,000 / 100,000 = $18.
3. Shortfall = 120,000 - 100,000 = 20,000. Percentage = (20,000 / 120,000) * 100 = 16.67%.
4. Complaint rate = (500 / 100,000) * 1,000 = 5 complaints per 1,000 patients.
5. Negotiating cheaper inputs (supplies) directly relates to Economy (minimizing the cost of resources).
Common mistakes
Calculating the shortfall percentage based on actual patients (20,000 / 100,000 = 20%) instead of the target.
Practice the full ACCA MA — Management Accounting Practice Exam 2
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