ExpertEasy2 marksMultiple Choice
ACCA · Question 26 · Performance measurement and control
Section B - Case 3: ClearFlow Initiative
ClearFlow is a Not-For-Profit (NFP) NGO dedicated to providing clean drinking water in rural communities. They measure their performance using the 'Value for Money' (VFM) framework, often referred to as the 3 Es.
During the year, ClearFlow negotiated a bulk discount with a supplier, reducing the cost of purchasing water filtration pumps from $500 per unit to $450 per unit.
Which of the 3 Es does this achievement directly demonstrate?
Section B - Case 3: ClearFlow Initiative
ClearFlow is a Not-For-Profit (NFP) NGO dedicated to providing clean drinking water in rural communities. They measure their performance using the 'Value for Money' (VFM) framework, often referred to as the 3 Es.
During the year, ClearFlow negotiated a bulk discount with a supplier, reducing the cost of purchasing water filtration pumps from $500 per unit to $450 per unit.
Which of the 3 Es does this achievement directly demonstrate?
Answer options:
A.
Economy
B.
Efficiency
C.
Effectiveness
D.
Equity
How to approach this question
Match the action (reducing the purchase price of an input) to the correct 'E' in the Value for Money framework.
Full Answer
A.Economy✓ Correct
In the Value for Money framework, 'Economy' refers to minimizing the cost of resources (inputs) used for an activity, while maintaining required quality. Negotiating a lower purchase price for the pumps is a classic example of improving Economy.
Common mistakes
Confusing Economy (cost of inputs) with Efficiency (outputs per input).
Practice the full ACCA PM — Performance Management Practice Exam 4
32 questions · hints · full answers · grading
More questions from this exam
Q01**Section A**
AgriCorp, a large-scale agricultural business, has recently implemented a system o...EasyQ02**Section A**
GlobalHealth NGO operates in 15 developing countries, providing emergency medical ...MediumQ03**Section A**
NovaTech is a startup developing a revolutionary AI-driven translation earpiece. M...MediumQ04**Section A**
MetroWater, a public utility company, is transitioning from traditional absorption...EasyQ05**Section A**
Titan Heavy Industries manufactures industrial cranes. The factory operates a bott...Medium