Solutions Manual For
Fundamentals of Cost Accounting
(2025 Release) 8th Edition By
William Lanen, Shannon
Anderson, Michael Maher
(All Chapters 1-18, 100% Original
Verified, A+ Grade)
All Chapters Arranged Reverse:
18-1
This is The Original Solutions
Manual For 8th Edition, All other
Files in The Market are
Fake/Old/Wrong Edition.
,18
Performance Measurement to Support Business Strategy
Solutions to Review Questions
R 18-1.
Good performance requires both a successful strategy and an organization that can enact
the strategy. That is, we need alignment between the strategy and organizational
structures to obtain performance. Cost accounting and management control practices are
important organizational structures for enacting strategy. Management accountants who
understand the business strategy will be better able to design and use accounting
systems to enact strategy.
R 18-2.
No. The balanced scorecard is a set of performance targets and results that show an
organization’s performance in meeting its objectives relating to competing stakeholders'
expectations. The performance measures are linked to the goals and the strategy for
meeting those goals.
R 18-3.
A business model, also called a strategy map, is a depiction of the links among individual
performance and the goals of the firm. It shows how different elements (units, individuals,
levels) of the organization combine to deliver value to the stakeholders in the firm.
R 18-4.
Financial measures of performance attract attention and identify areas where
improvements need to be made. Nonfinancial performance measures direct employees’
attention to the organization’s objectives and focus on the measures that are controllable
by each employee. They are more likely to be understood by operating personnel and are
also more timely.
R 18-5.
Critical success factors are the factors that are important to the organization’s success.
For example, proprietary technology is critical for a company pursuing an innovation
strategy, while established and high-functioning distribution channels are critical for cost
efficiency.
R 18-6.
People at different levels in the organization have different responsibilities. Performance
measures are most effective when they relate to what people at different levels control.
R 18-7.
Solutions Manual, Chapter 18 1
© McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw
Hill LLC.
,Benchmarking identifies an activity that needs to be improved, finds an organization that is
the most efficient at the activity, studies its process, and then utilizes that process.
R 18-8.
Competitive benchmarking involves the search for, and implementation of, the best way to
do something as practiced in other organizations. The firm can then adopt these practices
after adapting them for their own organization’s environment and culture.
R 18-9.
The firm’s value proposition describes how the organization will create value for its
stakeholders. The mission explains why the organization exists, along with its purpose and
goals. The mission statement describes the organization’s values, its responsibilities to its
stakeholders, and identifies its major stakeholders.
R 18-10.
An organization’s mission includes the organization’s values, its responsibilities to
stakeholders, and its goals. The strategy is the means to accomplish the mission.
R 18-11.
Customer satisfaction measures reflect the performance of the organization on several
factors, including quality control and delivery performance, that a customer values.
R 18-12.
Manufacturing cycle efficiency measures the efficiency of the total manufacturing cycle
(the most efficient companies have a measure of 1). This measure is important to most
companies because gains in efficiency generally improve company profitability.
R 18-13.
Delivery performance measures indicate how proficient the organization is at delivering
goods or services when promised to the customer. Poor delivery performance will likely
negatively impact an organization’s profitability as repeat business declines.
2 Fundamentals of Cost Accounting, 2025 Release
© McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw
Hill LLC.
, R 18-14.
Worker involvement is important for three reasons:
(1) Increased worker involvement often translates to an increased commitment to the
organization.
(2) Workers are able to be responsive at all levels if empowered with decision-making
responsibilities.
(3) Workers are able to use their skills and knowledge to further develop and to improve
the organization’s performance.
R 18-15.
See Exhibit 18.13 for examples.
R 18-16.
Objective measures can be independently verified such that different people can look at
them and agree that the method used to calculate the measure was correct. However,
such measures are rigid and often do not consider factors outside of the employees’
control.
Conversely, subjective measures cannot be independently verified such that they allow
managers to consider factors outside of the employees’ control that can otherwise distort
objective measures. However, subjective measures can be influenced by factors unrelated
to employee performance. Examples include managers’ personal preferences and
favoritism.
R 18-17.
Single measure advantages:
Relatively simple (i.e., understandable) and cost effective.
Highly congruent with the organization’s ultimate goal (e.g., profitability).
Multiple measure advantages:
Can evaluate managers not only on the outputs, but also the process used to
produce those outputs (i.e., inputs). Therefore, multiple measures can better
capture various aspects of managers’ decision authority.
Reduces the incentive for managers to engage in “myopia” or “suboptimization” by
narrowly focusing on a single measure at the cost of other important value-add
activities.
Multiple measures often include nonfinancial measures that are leading indicators
of success.
Solutions Manual, Chapter 18 3
© McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw
Hill LLC.
Fundamentals of Cost Accounting
(2025 Release) 8th Edition By
William Lanen, Shannon
Anderson, Michael Maher
(All Chapters 1-18, 100% Original
Verified, A+ Grade)
All Chapters Arranged Reverse:
18-1
This is The Original Solutions
Manual For 8th Edition, All other
Files in The Market are
Fake/Old/Wrong Edition.
,18
Performance Measurement to Support Business Strategy
Solutions to Review Questions
R 18-1.
Good performance requires both a successful strategy and an organization that can enact
the strategy. That is, we need alignment between the strategy and organizational
structures to obtain performance. Cost accounting and management control practices are
important organizational structures for enacting strategy. Management accountants who
understand the business strategy will be better able to design and use accounting
systems to enact strategy.
R 18-2.
No. The balanced scorecard is a set of performance targets and results that show an
organization’s performance in meeting its objectives relating to competing stakeholders'
expectations. The performance measures are linked to the goals and the strategy for
meeting those goals.
R 18-3.
A business model, also called a strategy map, is a depiction of the links among individual
performance and the goals of the firm. It shows how different elements (units, individuals,
levels) of the organization combine to deliver value to the stakeholders in the firm.
R 18-4.
Financial measures of performance attract attention and identify areas where
improvements need to be made. Nonfinancial performance measures direct employees’
attention to the organization’s objectives and focus on the measures that are controllable
by each employee. They are more likely to be understood by operating personnel and are
also more timely.
R 18-5.
Critical success factors are the factors that are important to the organization’s success.
For example, proprietary technology is critical for a company pursuing an innovation
strategy, while established and high-functioning distribution channels are critical for cost
efficiency.
R 18-6.
People at different levels in the organization have different responsibilities. Performance
measures are most effective when they relate to what people at different levels control.
R 18-7.
Solutions Manual, Chapter 18 1
© McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw
Hill LLC.
,Benchmarking identifies an activity that needs to be improved, finds an organization that is
the most efficient at the activity, studies its process, and then utilizes that process.
R 18-8.
Competitive benchmarking involves the search for, and implementation of, the best way to
do something as practiced in other organizations. The firm can then adopt these practices
after adapting them for their own organization’s environment and culture.
R 18-9.
The firm’s value proposition describes how the organization will create value for its
stakeholders. The mission explains why the organization exists, along with its purpose and
goals. The mission statement describes the organization’s values, its responsibilities to its
stakeholders, and identifies its major stakeholders.
R 18-10.
An organization’s mission includes the organization’s values, its responsibilities to
stakeholders, and its goals. The strategy is the means to accomplish the mission.
R 18-11.
Customer satisfaction measures reflect the performance of the organization on several
factors, including quality control and delivery performance, that a customer values.
R 18-12.
Manufacturing cycle efficiency measures the efficiency of the total manufacturing cycle
(the most efficient companies have a measure of 1). This measure is important to most
companies because gains in efficiency generally improve company profitability.
R 18-13.
Delivery performance measures indicate how proficient the organization is at delivering
goods or services when promised to the customer. Poor delivery performance will likely
negatively impact an organization’s profitability as repeat business declines.
2 Fundamentals of Cost Accounting, 2025 Release
© McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw
Hill LLC.
, R 18-14.
Worker involvement is important for three reasons:
(1) Increased worker involvement often translates to an increased commitment to the
organization.
(2) Workers are able to be responsive at all levels if empowered with decision-making
responsibilities.
(3) Workers are able to use their skills and knowledge to further develop and to improve
the organization’s performance.
R 18-15.
See Exhibit 18.13 for examples.
R 18-16.
Objective measures can be independently verified such that different people can look at
them and agree that the method used to calculate the measure was correct. However,
such measures are rigid and often do not consider factors outside of the employees’
control.
Conversely, subjective measures cannot be independently verified such that they allow
managers to consider factors outside of the employees’ control that can otherwise distort
objective measures. However, subjective measures can be influenced by factors unrelated
to employee performance. Examples include managers’ personal preferences and
favoritism.
R 18-17.
Single measure advantages:
Relatively simple (i.e., understandable) and cost effective.
Highly congruent with the organization’s ultimate goal (e.g., profitability).
Multiple measure advantages:
Can evaluate managers not only on the outputs, but also the process used to
produce those outputs (i.e., inputs). Therefore, multiple measures can better
capture various aspects of managers’ decision authority.
Reduces the incentive for managers to engage in “myopia” or “suboptimization” by
narrowly focusing on a single measure at the cost of other important value-add
activities.
Multiple measures often include nonfinancial measures that are leading indicators
of success.
Solutions Manual, Chapter 18 3
© McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw
Hill LLC.
