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Problem 1 (March/june 2021) Question b) https://www.acowtancy.com/exams/acca-apm/cbe-question/jun-2021-genuine-q1?fsid=8891e25264fdd19e03ecf869d4b24a07148c7b35
The answer to this part has introduce a performance indicator for measuring the impact of significant import tariff : “The introduction of tariffs will increase the costs and can be measured at Fiag by the negative impact on profit margins.”. I want to ask in this scenario, is this performance indicator suitable to measure the impact of tariff as the profit margin can be affected by a number of factors such as tax allowances to citizens, economic growth, healthy lifestyle,… so this performance indicator does not separate the effects of tariff alone on profit margin. Therefore, i want to ask in this scenario, is this performance indicator suitable to measure the impact of tariff as the performance indicator must be SMART?You are correct to say that there could be many influences on a company’s gross margin. Simply to blame all deterioration on the margin could be misleading. If I were writing an answer I would say something like “Assuming there are no other influences on the profit margin, we could assume that a deterioration is the direct result of import tariffs pushing up the cost of goods sold. The company should carefully consider if there are any confounding factors.”
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