Exam 18: Business Strategy, Performance Measurement, and the Balanced Scorecard

Cost accounting principles are an important component for any organization that assist management in their decision-making. Additionally, managers rely on accountants to interpret data and provide information to help them understand their business in greater depth. Which of the following choices best represents a strategic plan?

Tracy is the Chief Financial Officer for Trendy in a Box, a publicly traded fashion delivery subscription-based company headquartered in New York City. Trendy is entering its fourth year in business and has experienced annual sales growth every year. Their customers vary in age, gender, and geographic location. Trendy's includes accountants, customer service reps, warehouse staff, and personal shoppers, personal shopper is the most sought-after position in the organization. All employees, except for warehouse workers and personal shoppers, have the option to work in-office or remotely and this has created some unique tax issues for Trendy in a Box to overcome. Tracy is preparing for the company's annual employee meeting where they discuss the past year and reveal plans for the upcoming year. Tracy is consulting all departments and asking each for data. Tracy would like to see Trendy continue growing and would like to present a plan to all Trendy's employees at the upcoming meeting. With all of this in mind, answer the following questions with the objective of preparing Tracy for the meeting. a. What are some examples of financial performance measures this company could use and why choose those? Would other companies use the same measures? b. What are some examples of nonfinancial performance measures that Trendy company could use and why choose those? Will all Trendy's departments use the same measures? c. One company-wide goal is to improve staff evaluation procedures. What are the five most important aspects of the staff performance evaluation process from the employee's perspective, and how can Trendy ensure they are thoroughly addressing each? d. The company is considering hiring new employees and must determine the best way to compensate the new hires. Based on the information provided above, what type of compensation would be the most sensible choice? e. If you were a manager at this company, how would you describe the importance of performance measurement to the rest of the management team, and how would you describe it to other employees?

Artemis Corporation is a large, national company that manufactures and sells designer, vegan leather products. Their offerings include jackets, pants, dresses, tops, shoes, and accessories. In addition to being sold in high-end luxury stores, they also have a website where people from all over the country can purchase their goods. The management for Artemis has created the following list (in no particular order) of objectives, initiatives, measures, and targets for the upcoming year. The managers for Artemis are completing the balanced scorecard using the objectives, initiatives, measures, and targets above. a. Sort the objectives, initiatives, measures, and targets and complete the financial perspective of the balanced scorecard. b. Sort the objectives, initiatives, measures, and targets and complete the customer perspective of the balanced scorecard. c. Sort the objectives, initiatives, measures, and targets and complete the internal business process perspective of the balanced scorecard. d. Sort the objectives, initiatives, measures, and targets and complete the learning and growth perspective of the balanced scorecard. e. Does the balanced scorecard prepared by Artemis align with what you would expect from a company in this industry? How will management use this information in the upcoming year? Are there any other considerations to make when a company decides to use a balanced scorecard?

A small ceramics company is compiling data about its performance during the last two fiscal years. They reported the following: Using the information above, what is their after-tax income for year 2?

According to Porter, there are five forces that must be assessed and acknowledged by any business who wishes to successfully create an effective strategy. Which of the following best demonstrates the power of a handmade furniture store as a customer?

Carrie is currently a full-time employee at a law firm, and she also makes and sells jewelry online in her personal time. She is trying to evaluate her side business in terms of financial measures. The online shop generated the following numbers on average per month: Sales, $4,316.00; Variable Costs, $1,809.00; and Fixed Costs, $762.00. Carrie sold 1,144 units per month. What is Carrie's annualized operating margin? (Round your answer to two decimal places.)

As a manager for a large organization, you may have to find a way to motivate employees. This could include evaluations in addition to compensation. What are four ways that employees can be compensated, and when it is most effective to use each?

One of the most crucial components of having employees is to make sure their evaluations are both fair and appropriate. From an employee's perspective, there are five significant aspects of the performance evaluation process. Which of the following best represents the communication perspective?

From an employee's perspective, one of the most important aspects of working for an organization is to be evaluated fairly. For the performance evaluation process, there are aspects from this perspective and each is important. Which of the following best represents the mentoring perspective?

At the completion of its most recent fiscal year, the management of Fast Cars, Inc., a dealership firm, is evaluating their performance. They created a balanced scorecard at the beginning of the year and identified an objective of increasing customer satisfaction. What could they measure to see if they succeeded in their objective?

Businesses use Porter's Five Forces to determine how well companies will be able to generate a profit. To create and implement a successful strategic route, companies will take the five forces into consideration. Which of the following is a good representation of the threat of substitutes?

Simone is a staff accountant for a local factory and has been asked to gather data and perform some analysis by the end of the week for the annual financial performance review. She compiled the following information: Assume that expenses do not include depreciation, amortization, or interest. What is the difference between earnings before interest and taxes (EBIT) for Years 1 and 2?

Sharon needs travel from Los Angeles to a client site in San Diego that is 120 miles away. The company will be paying for her travel, and they asked her to choose one of the following options (listed from most to least expensive): Airplane (50 minutes), train (2 hours and 55 minutes), rental car (2 hours), or bus (3 hours and 15 minutes). If the customer's value proposition is to obtain the fastest mode of transportation without regard to price, then which two options is she most likely to consider?

Sarah is the general manager for an electronics company, and they are currently evaluating company's performance for the year. Sarah decided to use a balanced scorecard (BSC) to look at both financial and nonfinancial metrics. Which of the following would be an appropriate objective to be implemented from the internal business process perspective?

The accounting department of Stryker Inc. is putting together a financial analysis for management. They are focusing on performance measures and pulled together information from the two most recent years. If the accounting department would like to evaluate financial measures, then what is an appropriate choice for that evaluation?

A company's strategic plan is an integral part of their initial planning and is comprised of five components. Management builds their strategic plan around five specific components to meet their objectives. Which of the following best represents some aspects of a strategic plan in the correct order?

A grocery store just finished another year of operations. As part of their annual wind-down process, they will compile the actual performance metrics to be used in their balanced scorecard (BSC). One of their objectives this year was to increase customer satisfaction as measured by an increase in the average customer satisfaction rating. Which of the following could be a red flag that someone used unethical behavior to achieve this goal?

Turner Electronics is a retail store that specializes in the sale of small electronics including televisions, computers, and stereo equipment. Management has been concerned that the company is both overordering and not turning over merchandise as quickly as they did in years prior. Once inventory has been available for sale for six months, the store marks the sales price down so that they can make room for new products. Management would like to perform some analysis and determine if their concerns are valid. Here is some partial information from their recent financial statements: Use the information above to answer the following questions. (Use 365 days in each year, and round all calculations to two decimal places.) a. What is the Inventory Turnover in Years 1 and 2, and what is the percentage change between years? b. Based on the answer from part a, determine the Days' Sales in Inventory in Years 1 and 2, and calculate the change between the two years. c. Based on this initial analysis, which year was more efficient at turning over inventory, and what suggestions, if any, could be made to management to improve these financial metrics?

Shawn is a chef who has been working at a local French restaurant. He has finally saved enough money and secured additional external financing to open his own restaurant. He decided to specialize in plant-based food with choices that include veggie burgers, salads, smoothie bowls, soups, and pasta. He is confident his skills will lend themselves to crafting desirable products that will garner a lot of support and interest from his community. Currently, there are no restaurants that are solely plant-based in his area. He would like to open a brick-and-mortar store in the next six months, and he is fully aware that much work must be done before that. As part of his planning, he enlisted the help of a business manager, Chris. The first step of their analysis will be to identify factors that shape this industry and to use this information to create a unique and well-developed strategy. Chris would like to sit down with Shawn and discuss these items together before proceeding. With this in mind, please answer the following questions. a. What would an appropriate element of each of Porter's Five Forces that this new restaurant business is likely to encounter be? b. Is the company using a cost leadership or product differentiation strategy, and what is the difference between these strategies? c. If you were helping Chris and Shawn develop a strategy, what advice would you give them, and are there any additional considerations they should be aware of?

Kelsey has been making soy candles for friends and family for many years. Recently she debated making an official website to sell her candles to the general public. Her variable cost is $4.20 per unit, and she would sell each candle for $10.00. Her fixed costs will be $418.00 per month. How many units would she need to sell per year to completely replace her current annual salary of $36,450? Round your final answer to the nearest whole unit.