Advanced Within a diversified group, one division, which operates many similar branches in a service indus¬ try, has used internal benchmarking and regards it as very useful.

Group central management is now considering the wider use of benchmarking.

Requirement:

(a) Explain the aims, operation, and limitations of internal benchmarking, and explain how external benchmarking differs in these respects. (10 marks)

(b) A multinational group wishes to internally benchmark the production of identical components made in several plants in differ¬ ent countries. Investments have been made with some plants in installing new Advanced Manufacturing Technology (AMT) and supporting this with manufacturing manage¬

ment systems such as Just in Time (JIT) and Total Quality Management (TQM). Prelimin¬ ary comparisons suggest that the standard cost in plants using new technology is no lower than that in plants using older technology.

Requirement:

Explain possible reasons for the similar standard costs in plants with differing technology. Recom¬ mend appropriate benchmarking measures, recog¬ nising that total standard costs may not provide the most useful measurement of performance.

(10 marks) (Total 20 marks) CIMA Stage 4 Management Accounting Control Systems