How to configure cascading filters in Dashboard Designer (SharePoint 2010 SP1)

In the past I posted the new SharePoint SP1 features for PerformancePoint Services which included the new cascading filters option. In this post, I'm going to show you the basic steps to achieve this goal with Dashboard Designer in SharePoint 2010 SP1.

Goal: Create a set of two or more filters where the output of one filter becomes the input of another; or more precisely, the choices made in one filter limit the choices available in another. A good example would be filters in the same hierarchy such as time or geography.