EXERCISE 10-15 (CONTINUED) ALTERNATIVE SOLUTION

3. - SOLUTIONS TO QUESTION MANAGERIAL ACCOUNTING CH10 STANDARD COST AND THE BALANCE SCORECARD 3. - SOLUTIONS TO QUESTION MANAGERIAL ACCOUNTING CH10 STANDARD COST AND THE BALANCE SCORECARD
SOLUTIONS TO QUESTION MANAGERIAL ACCOUNTING CH10 STANDARD COST AND THE BALANCE SCORECARD
3. Management will be able to tell if a hypothesis is false if an improve-ment in a performance measure at the bottom of an arrow does not, in fact, lead to improvement in the performance measure at the tip of the arrow. For example, if the number of menu items is increased, but cus-tomer satisfaction with the menu choices does not increase, manage-ment will immediately know that something was wrong with that par-ticular hypothesis. Problem 10-29 (45 minutes) The answers below are not the only possible answers. Ingenious people can figure out many different ways of making performance look better even though it really isn’t. This is one of the reasons for a balanced score-card. By having a number of different measures that ultimately are linked to overall financial goals, “gaming” the system is more difficult.