ACCA Performance Management (F5) Certification Practice Exam

What is the purpose of Cost-benefit analysis (CBA)?

1. To assess the technical performance of systems

2. To evaluate the expected costs and benefits of information systems

3. To analyze competitor pricing strategies

4. To determine marketing effectiveness

The correct answer is: To evaluate the expected costs and benefits of information systems

Cost-benefit analysis (CBA) serves the primary purpose of evaluating the expected costs and benefits associated with a particular project or investment, such as information systems. This method allows organizations to systematically assess the financial implications by quantifying both the anticipated costs that will be incurred and the benefits that are expected to be realized over time. By using CBA, decision-makers can weigh these factors to determine whether the investment will yield a favorable return and how it aligns with the organization's strategic goals. This analysis is crucial for ensuring that resources are allocated efficiently and effectively, ultimately leading to informed choices that maximize value. While other options touch on important business areas, they do not accurately reflect the specific focus of CBA. Evaluating technical performance of systems focuses more on functionality and operational efficiency rather than cost and benefit. Similarly, analyzing competitor pricing strategies and determining marketing effectiveness falls outside the realm of CBA, which is centered on a detailed financial evaluation rather than market competition or promotional success.