The article “How Nonfinancial Performance Measures Are Used” (Management Accounting, February 1998) describes several emerging performance measures that do not rely on financial data. Read this article and complete the following requirements.

Required

a. What are nonfinancial performance measures? Provide several examples.

b. The article describes five categories of nonfinancial performance measures. Identify these categories. Which category do executives consider most important?

c. Can you compute variances for nonfinancial performance measures? Explain.

d. Comment on the extent to which executives use nonfinancial measures.

e. The authors indicate that their study identified three red flags that executives need to address to use nonfinancial performance measures more effectively. Identify and briefly discuss these three red flags.