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JenCo is considering introducing non-financial performance indicators. A junior accounting assistant has suggested the following advantages of non-financial performance indicators:
(1) They focus the attention of management on the areas such as quality which will lead to better long-term performance
(2) They cannot be manipulated
(3) Non-financial reports can generally be compiled more quickly than financial reports
(4) Using only financial performance measures may lead to excessive cost cutting that may harm the business in the long term
Which of the above statements are correct?
DOUBT—– SIR the correct answer are 1,3&4 and my doubt is how non-financial indicator can be manipulated? for ex – is it possible to manipulate delivery / order and also product returned / product delivered? and please also explain 3rd statement also.
All measures can potentially be manipulated. For example if a manager is being measured on the % of goods returned due to them being faulty, then to make themselves look ‘better’ in a particular period they might record the returns as being in a later period then they should be recorded.
Although non-financial measures cannot always be compiled more quickly, they are more likely to be quicker because they are not likely to involve as much calculating as financial measures. For example, for % of goods delivered on time we just need to know the total number delivered and the number of them delivered on time.
However for measures involving (for example) profitability we need to spend time calculating the profits in the first place and it also takes time to collate all the figures needed.thank so much sir for clearing my doubt and here i got one more doubt
Q-15—–Wig’s monthly absorption costing variance analysis report includes a sales mix variance, which indicates the effect on profit of actual sales mix differing from the budgeted sales mix. The following data is available:
Product RR Product SS
$ $
Selling price 12 11
Less: Variable cost 6 2
Fixed cost 2 3
(8) (5)
Standard net profit per unit 4 6July sales (units)
Budget 3,000 6,000
Actual 2,000 8,000What is the favourable sales mix variance for July (to the nearest $)?
this is also from pre june mock–
sir my answer is
Budg Q actual q AQ*SP SM SALES MIX VAIRANCE
3000 2000 3333.333333 4 5333.333333
6000 8000 6666.666667 6 -8000
= 9000 = 10000 =10000 = -2666.666667Thats my answer but according to them it should be 275….how its possible sir?
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