Importance of nonfinancial measures

Importance of nonfinancial measures offer four advantages based on financial date. First, the long term organization strategies they do not deal with profitability, competitive, strength and longer term strategic goals. They only do their job of new product development and expand organizational capabilities which are important for strategic goals. Second, intangible assets which is intellectual capital and customer loyalty of company rather than balance sheet. Third non financial measures help us to predict and see future financial performance. Such is investment in research development or customer satisfaction program will make more profit and bring more satisfied customers. Fourth, management actions and level of noise change those are beyond the control of managers or organizations. Managers have to watch company’s success and failing that way the need to maximize their effect on their performance. Measurement gaps is that customer related performance is a long term strategy and it was more successful than short term financial performance according to survey of 148 U.S financial service company. Non-financial measure is important in decision making and performance evaluation. Companies should know that measuring is a dynamic process. Measure might be good today but it should be keep reassessed and involve competitive environment.

Reference https://knowledge.wharton.upenn.edu/article/non-financial-performance-measures-what-works-and-what-doesnt/ 1 How do managers plan for variable overhead costs?
Managers plan for variable overhead changes with the level of activity, so if managers think they are overspending on variable overhead, managers are able to slow or stop the production process and investigate. If some reason a company needs to increase production, managers have to check and add variable overhead as needed.
1. How does the planning of fixed overhead cost differ from the planning of variable costs?
Fixed overhead costs involve