ACCA Performance Management (F5) Certification Practice Exam

What analysis is used to help close cost gaps?

1. Variance analysis

2. Value analysis

3. Trend analysis

4. Cost-benefit analysis

The correct answer is: Value analysis

Value analysis is a systematic approach used to improve the value of a product or service by assessing its functions and design, seeking to reduce cost without affecting quality. This method helps organizations identify unnecessary costs and improve the overall value proposition. By focusing on the functions that a product or service is meant to deliver, value analysis encourages organizations to challenge traditional assumptions regarding costs and processes, ultimately aiming to close any cost gaps by optimizing resource allocation and operational efficiency. In contrast, variance analysis primarily evaluates the differences between planned and actual costs, identifying where discrepancies occur but not directly addressing the underlying cost structure to improve value. Trend analysis focuses on patterns over time rather than immediate cost efficiency, while cost-benefit analysis assesses the financial implications of projects or initiatives rather than aiming specifically to bridge cost gaps. Therefore, value analysis is uniquely positioned to identify and address these gaps effectively.