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FOR EXAMS UP TO JUNE 2014 ii ©
BPP Learning Media Ltd
2012
First edition 2007
Sixth edition September 2012
ISBN 9781 4453 9647 7
(Previous ISBN 9781 4453 7761 2)
e-ISBN 9781 4453 9207 3
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The exam paper ix
Syllabus and Study Guide x
Part A Specialist cost and management accounting techniques
1 Costing 3
2a Activity based costing 21
2b Target costing 31
2c Life cycle costing 39
2d Throughput accounting 49
2e Environmental accounting 61
Part B Decision-making techniques
3 Cost volume profit (CVP) analysis 71
4 Limiting factor analysis 93
5 Pricing decisions 119
6 Short-term decisions 153
7 Risk and uncertainty 169
Part C Budgeting
8 Budgetary control 199
9 Budgetary systems 213
10 Quantitative analysis in budgeting 233
Part D Standard costing and variance analysis
11 Budgeting and standard costing 251
12 Variance analysis 271
13 Behavioural aspects of standard costing 293
Part E Performance management systems, measurement and control
14 Performance management information systems 313
15 Sources of management information and management reports 331
16 Performance measurement 349
17 Divisional performance measures 377
18 Further performance management 399
Exam question bank

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Introduction
v

Helping you to pass – the ONLY F5 Study Text reviewed by
the examiner!
BPP Learning Media – the sole Platinum
Approved Learning Partner − content
As ACCA’s sole Platinum Approved Learning Partner – content, BPP Learning Media gives you the unique
opportunity to use examiner-reviewed study materials for the 2013 exams. By incorporating the examiner’s
comments and suggestions regarding the depth and breadth of syllabus coverage, the BPP Learning Media
Study Text provides excellent, ACCA-approved support for your studies.
NEW FEATURE – the PER alert!
Before you can qualify as an ACCA member, you do not only have to pass all your exams but also fulfil a three
year practical experience requirement (PER). To help you to recognise areas of the syllabus that you might
be able to apply in the workplace to achieve different performance objectives, we have introduced the ‘PER
alert’ feature. You will find this feature throughout the Study Text to remind you that what you are learning
to pass your ACCA exams is equally useful to the fulfilment of the PER requirement.


Tells you what you will be studying in this chapter and the
relevant section numbers, together the ACCA syllabus
references.
Introduction
Puts the chapter content in the context of the syllabus as
a whole.
Study Guide
Links the chapter content with ACCA guidance.
Exam Guide
Highlights how examinable the chapter content is likely to
be and the ways in which it could be examined.

Knowledge brought forward from earlier studies

What you are assumed to know from previous
studies/exams.

Summarises the content of main chapter headings,
allowing you to preview and review each section easily.
Examples
Demonstrate how to apply key knowledge and
techniques.
Key terms
Definitions of important concepts that can often earn you
easy marks in exams.
Exam focus points
Tell you when and how specific topics were examined, or
how they may be examined in the future.
Formula to learn

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Introduction
vii

Studying F5
The F5 examiner wants candidates to be able to apply management accounting techniques in business
environments. The key question you need to be able to answer is 'what does it all actually mean?' Modern
technology is capable of producing vast amounts of management accounting information but it has to be
used to help managers to make good decisions and manage effectively. The emphasis in this paper is
therefore on practical elements and application to the real world. The examiner does not want to trick you and
papers will be fair.
The F5 examiner
The examiner for this paper is Ann Irons, who replaced Geoff Cordwell from the December 2010 sitting
onwards. Ann Irons has written several articles in Student Accountant, including one on how to approach the
paper (September 2010 issue). Make sure you read these articles to gain further insight into what the
examiner is looking for.
viii
Introduction
1 What F5 is about
The aim of this syllabus is to develop knowledge and skills in the application of management accounting
techniques. It covers modern techniques, decision making, budgeting and standard costing, concluding with
how a business should be managed and controlled.
F5 is the middle paper in the management accounting section of the qualification structure. F2 concerns just
techniques and P5 thinks strategically and considers environmental factors. F5 requires you to be able to
apply techniques and think about their impact on the organisation.

Introduction
ix

The exam paper
Format of the paper
The exam is a three-hour paper containing five compulsory 20 mark questions. You also have 15 minutes for
reading and planning.
There will be a mixture of calculations and discussion and the examiner's aim is to cover as much of the
syllabus as possible.

Syllabus and Study Guide

The F5 Syllabus and Study Guide can be found on the next page.
x
Introduction Introduction
xi xii
Introduction Introduction
xiii xiv

in Text
chapter June
2012Dec
2011June
2011

Dec
2010

June
2010
Pilot
Paper

SPECIALIST COST AND MANAGEMENT ACCOUNTING
TECHNIQUES

2a Activity based costing 5 4 1 1
2b Target costing 2
2c Life cycle costing 4
2d Throughput accounting 5

13 Planning and operational variances 1
13 Behavioural aspects of standard costing 4

PERFORMANCE MEASUREMENT AND CONTROL

14 Performance management information systems
15
Sources of management information and management
reports

16 The scope of performance measurement 4 2 4
17 Divisional performance and transfer pricing 5 2 4 4

18
Performance analysis in not-for-profit organisations and
the public sector
Introduction
xxi

Exam formulae
Set out below are the formulae you will be given in the exam. If you are not sure what the symbols mean, or
how the formulae are used, you should refer to the appropriate chapter in this Study Text.
Chapter in
Study Text
Demand curve
5
P = a – bQ

xxii
Introduction
1
Specialist cost and
management accounting
techniques

P
A
R
T
A