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ACCA Applied Knowledge · Management Accounting · Performance measurement - overview

Hollis Co has set out the following measures: (1) return on capital employed, (2) percentage of customers who would recommend the firm, (3) average hours of training per employee, (4) machine set-up time. Which allocation to balanced scorecard perspectives is correct?

ROCE is financial, customer recommendation is customer, training hours are innovation and learning, and machine set-up time is internal business process. Each measure matches the question its perspective asks, so the first allocation is the only one that places all four measures correctly.

  1. A1 financial, 2 customer, 3 innovation and learning, 4 internal business processCorrect
  2. B1 financial, 2 internal business process, 3 customer, 4 innovation and learning
  3. C1 customer, 2 financial, 3 innovation and learning, 4 internal business process
  4. D1 financial, 2 customer, 3 internal business process, 4 innovation and learning

Explanation

ROCE is a financial measure. Customer recommendation shows how customers view the firm, so it is a customer measure. Training hours develop staff capability, so they fall in innovation and learning. Machine set-up time is an operational efficiency measure in the internal business process perspective. The other options misplace at least one measure, for example treating training as a process measure.

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