ACCA Applied Knowledge · Management Accounting · Performance measurement - overview
Ashby Co uses a performance pyramid in which the top level is the corporate vision. Which statement about the performance pyramid (Lynch and Cross) is correct?
The performance pyramid links corporate strategy to operations. Objectives flow down from the vision through business units and operating systems to departments, while performance measures flow back up. It includes both financial and non-financial measures, so the other statements describe the balanced scorecard or value for money.
- AIt links corporate strategy to operations by translating objectives down and measures up through the levelsCorrect
- BIt has four perspectives that all carry equal weight in every organisation
- CIt measures only financial results at business unit level
- DIt divides performance into inputs, outputs and outcomes only
Explanation
The performance pyramid links strategy to operations: objectives flow down from vision to business units to operating systems to departments and work centres, and measures flow back up. It distinguishes external effectiveness and internal efficiency, not four equal perspectives. It is not limited to financial measures. The inputs-outputs-outcomes split describes value for money, not the pyramid.
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