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“A Balanced Scorecard expresses the complete story of a company’s strategy through an integrated set of financial and nonfinancial measures that are both predictive and historical and that may be measured subjectively or objectively.” Required: 1. Using the above statement about scorecard measures, explain how scorecard measurement differs from that of an activity-based management system. 2. Explain what is meant by historical and predictive measures. Why are both types important for describing a company’s strategy?

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Cornerstones of Cost Management (C...

4th Edition
Don R. Hansen + 1 other
Publisher: Cengage Learning
ISBN: 9781305970663

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Chapter
Section
BuyFindarrow_forward

Cornerstones of Cost Management (C...

4th Edition
Don R. Hansen + 1 other
Publisher: Cengage Learning
ISBN: 9781305970663
Chapter 13, Problem 5E
Textbook Problem
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“A Balanced Scorecard expresses the complete story of a company’s strategy through an integrated set of financial and nonfinancial measures that are both predictive and historical and that may be measured subjectively or objectively.”

Required:

  1. 1. Using the above statement about scorecard measures, explain how scorecard measurement differs from that of an activity-based management system.
  2. 2. Explain what is meant by historical and predictive measures. Why are both types important for describing a company’s strategy?

1.

To determine

Explain the manner in which scorecard measurement differs from that of an activity-based management system.

Explanation of Solution

Activity-Based responsibility accounting: Activity based responsibility accounting indicates a vital change regarding the manner, in which responsibility is assigned, measured and evaluated.

Strategic-based responsibility accounting: Strategic-based performance management system transforms the strategy of an entity into “operational objectives and measures”.

  • Scorecard measures differ from that of an activity-based management system for the reason that they are integrated...

2.

To determine

Explain the meaning of historical and predictive measures and state the importance of them in predicting the company’s strategy.

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Chapter 13 Solutions

Cornerstones of Cost Management (Cornerstones Series)
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