ACCA Performance Management (F5) Certification Practice Exam

Which of the following best describes contributory assessments during resource allocation?

1. Consideration of overhead costs

2. Focus on total sales

3. Evaluation based on contribution per unit of scarce resource

4. Assessment of fixed costs only

The correct answer is: Evaluation based on contribution per unit of scarce resource

Contributory assessments during resource allocation involve evaluating the contribution that different products or services bring per unit of a scarce resource. This approach is vital for making informed decisions about how to allocate limited resources effectively to maximize overall profitability. When focusing on contribution per unit, the assessment aims to identify which products generate the most profit relative to the resource inputs. This consideration is especially crucial in situations where resources are limited, as it helps prioritize those products that provide the best return on investment. In contrast, options that discuss overhead costs, total sales, or fixed costs do not directly address the efficiency of resource utilization in terms of contribution margin. Overhead costs and fixed costs are not variable to the level of activity in the same way that contribution margins are, and assessing total sales does not provide insight into profitability or resource efficiency. Instead, evaluating based on contribution per unit directly aligns with optimal resource allocation strategies in performance management.