ACCA Performance Management (F5) Certification Practice Exam

What type of measure is considered maximum output achieved from the resources used?

1. Efficiency measure

2. Effectiveness measure

3. Economy measure

4. Profitability measure

The correct answer is: Efficiency measure

The concept of maximum output achieved from the resources used directly aligns with the efficiency measure. Efficiency focuses on how well resources are converted into outputs. It assesses the relationship between inputs (resources such as time, materials, and labor) and outputs (product or service produced). When an organization achieves maximum output while utilizing resources optimally, it reflects high efficiency. In this context, efficiency can be viewed as the ability to produce the greatest amount of output for a given level of input, or conversely, to use the least amount of input to achieve a certain level of output. This is critical for organizations seeking to minimize costs and maximize productivity. In contrast, effectiveness evaluates how well an organization achieves its goals and objectives, regardless of the resources used. Economy refers to the cost-effectiveness of resources used in producing outputs, which can be independent of the actual output level. Profitability measures an organization's ability to generate income relative to expenses, focusing on financial performance rather than operational efficiency regarding resource utilization. Each of these other measures holds importance in performance management, but they do not specifically represent the achievement of maximum output based on resource usage like the efficiency measure does.