ExpertMedium2 marksMultiple Choice
The nature, source and purpose of management informationArea ALimitations of InformationQualitative Factors
ACCA · Question 05 · The nature, source and purpose of management information
Section A
In a boutique consulting firm, management relies heavily on quantitative variance reports to assess partner performance.
What is a primary limitation of relying solely on this type of management information?
Section A
In a boutique consulting firm, management relies heavily on quantitative variance reports to assess partner performance.
What is a primary limitation of relying solely on this type of management information?
Answer options:
A.
Quantitative data is always historically inaccurate.
B.
Qualitative factors, such as client satisfaction and staff morale, may be ignored.
C.
Variance reports cannot be generated for service industries.
D.
It is illegal to use quantitative data for internal performance reviews.
How to approach this question
Consider what numbers alone cannot tell you about a business, especially a service business.
Full Answer
B.Qualitative factors, such as client satisfaction and staff morale, may be ignored.✓ Correct
A major limitation of purely quantitative financial information is that it ignores qualitative factors. In a consulting firm, client satisfaction, reputation, and staff morale are critical to long-term success but may not immediately reflect in short-term quantitative variance reports.
Common mistakes
Assuming variance analysis is only for manufacturing.
Practice the full ACCA MA — Management Accounting Practice Exam 6
38 questions · hints · full answers · grading
More questions from this exam
Q01**Section A**
Global Wildlife Trust, an international NGO, is deciding whether to expand its con...EasyQ02**Section A**
CloudSync, a rapidly growing SaaS tech startup, monitors the daily server uptime a...EasyQ03**Section A**
AgriGrow operates a network of automated hydroponic farms. The management accounta...MediumQ04**Section A**
A municipal water treatment plant utilizes both financial accounting and managemen...EasyQ06**Section A**
TitaniumForge operates a heavy steel forging plant. The total electricity costs re...Medium