CostAccountingSeventeenthEdition,GlobalEditionChapter24PerformanceMeasurement,Compensation,andMultinationalConsiderationsCopyright?2021PearsonEducationLtd.

LearningObjectives(1of2)24.1Selectfinancialandnonfinancialperformancemeasurestouseinabalancedscorecard24.2Examineaccounting-basedmeasuresforevaluatingabusinessunit’sperformance,includingreturnoninvestment(ROI),residualincome(RI),andeconomicvalueadded(EVA?)24.3Analyzethekeymeasurementchoicesinthedesignofeachperformancemeasure24.4Studythechoiceofperformancetargetsanddesignoffeedbackmechanisms

LearningObjectives(2of2)24.5Indicatethedifficultiesthatoccurwhentheperformanceofdivisionsoperatingindifferentcountriesiscompared24.6Understandtherolesofsalariesandincentiveswhenrewardingmanagers24.7Describethefourleversofcontrolandwhytheyarenecessary

FinancialandNonfinancialPerformanceMeasuresManyorganizationsrecordfinancialandnonfinancialperformancemeasuresfortheirsubunitsonabalancedscorecard.Thescorecardsofdifferentorganizationsemphasizedifferentmeasures,butthemeasuresarealwaysderivedfromacompany’sstrategy.ThefourbalancedscorecardperspectivesFinancialCustomerInternalbusinessprocessLearningandgrowth

DesigningAccounting-BasedPerformanceMeasuresRequiresSeveralStepsChooseperformancemeasuresthatalignwiththefirm’sfinancialgoals.Choosethedetailsofeachperformancemeasureinstep1.Chooseatargetlevelofperformanceandafeedbackmechanismforeachperformancemeasureinstep1.

Accounting-BasedMeasuresforBusinessUnitsReturnoninvestmentResidualincomeEconomicvalueaddedReturnonsales(Thismeasuredoesnotaccountforinvestment.)

ReturnonInvestment(ROI)(1of3)ROIisanaccountingmeasureofincomedividedbyanaccountingmeasureofinvestment.

ReturnonInvestment(ROI)(2of3)MostpopularmetricfortworeasonsBlendsall