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Examiner tips for PM
05 February 2019
PM exam sitters should remember to use the spreadsheet functionality properly – that means calculating totals by inserting formulae rather than typing in the number, says the PM examiner. The examiner said this was still an issue at the December sitting, even though CBE exams are well established.
The examiner noted that transfer pricing is not a very popular topic with candidates. If you are asked to prepare profit statements for each division and the company then put the narrative on the left-hand side of the page and have one column for each of the divisions and another for the company itself. Simple! The internal sales revenue/purchase costs do not need to be shown in the company column as these occur as a result of the 2 divisions transferring goods between then and do not impact the overall consolidated company results.
You must be able to explain the impact of transfer pricing policy on the behaviour and decision making of divisional management, and how it affects the company as a whole.
When it comes to rolling budgets a common error is to start with the actual quarter 1 figures, which are given in the question and then only produce 3 further quarters. “This shows a lack of understanding of how rolling budgets work and it was disappointing to see this same mistake being made again in December 2018.”
With flexed budgets remember the original quantity used in the original budget is revised, in the flexed column, to the actual quantity. Without this revision, the flexed budget would be meaningless and yet the biggest problem when this area is examined is that the majority of candidates do not revise the quantity in this way. “This makes it very difficult to earn any marks,” said the examiner. Similarly, when budgeted figures are compared to actual figures it is critical that the same time period is under consideration.
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