Exam 13: Strategy, Balanced Scorecard, and Profitability Analysis

Use the information below to answer the following question(s). Following a strategy of product differentiation, Instruments Inc. makes a hand held calculator, II400. Instruments Inc. presents the following data for the years 1 and 2: Instruments Inc. produces no defective units but it wants to reduce direct materials usage per unit of II400 in year 2. Manufacturing conversion costs in each year depend on production capacity defined in terms of II400 units that can be produced. Selling and customer-service costs depend on the number of customers that the customer and service functions are designed to support. Neither conversion costs or customer-service costs are affected by changes in actual volume. Instruments Inc. has 23 customers in year 1 and 25 customers in year 2. The industry market size for hand held calculators increased 5% from year 1 to year 2. Of the $4 increase in unit selling price, $1 is due to a general increase in prices. -Required: a. What amount is the revenue effect of the growth component? b. What amount is the cost effect of the growth component? c. What is the net effect on operating income as a result of the growth component?

Justine Ltd. provided the following information. What is the partial productivity ratio?

Grader Company manufactures road graders. Because its managers all have engineering backgrounds, it prefers nonfinancial information for its decision-making models. Therefore, it requires that the accountants gather data to assist in the examination of nonfinancial results of operations. The following information relates to the manufacture of a mobile paver: Required: a. What is the partial productivity for direct materials for each year? b. What is the partial productivity for direct manufacturing labour for each year? c. What is the total factor productivity for each year?

Match each of the following balanced scorecard measures with the appropriate perspective. -new product development time

An analysis of Gardner Corporation's operating income changes between Year 1 and Year 2 show the following: Operating income for Year 1 $1,000,000 Add growth component 50,000 Deduct price-recovery component (30,000) Add productivity component 120,000 Operating income for Year 2 $1,140,000 Required: Is Gardner's operating income gain consistent with the product differentiation or cost leadership strategy? Explain briefly.

Use the information below to answer the following question(s). Following a strategy of product differentiation, Despotovich Corporation makes a high-end Computer Monitor, CM12. Despotovich Corporation presents the following data for the years 1 and 2: Despotovich Corporation produces no defective units but it wants to reduce direct materials usage per unit of CM12 in Year 2. Manufacturing conversion costs in each year depend on production capacity defined in terms of CM12 units that can be produced. Selling and customer-service costs depend on the number of customers that the customer and service functions are designed to support. Neither conversion costs nor customer-service costs are affected by changes in actual volume. Despotovich Corporation has 46 customers in Year 1 and 50 customers in Year 2 . The industry market size for high-end computer monitors increased 5% from Year 1 to Year 2. Of the $40 increase in unit selling price, $10 was attributable to a general increase in prices. -Required: a. What amount is the revenue effect of growth component? b. What amount is the cost effect of growth component? c. What is the change in operating income as a result of the growth component?

Analyze the results from specific productivity and capacity control strategies to achieve BSC expectations. -Melik Company provided the following information: What is the partial productivity ratio?

Match each of the following balanced scorecard measures with the appropriate perspective. -market share

Match each of the following balanced scorecard measures with the appropriate perspective. -service response time

Match each of the following balanced scorecard measures with the appropriate perspective. -gross margin percentage

Which of the following statements is TRUE concerning productivity measures?

Use the information below to answer the following question(s). Following a strategy of product differentiation, Luke Company makes a high-end Appliance, AP15. Luke Company presents the following data for the years 1 and 2. Luke Company produces no defective units but it wants to reduce direct materials usage per unit of AP15 in year 2. Manufacturing conversion costs in each year depend on production capacity defined in terms of AP15 units that can be produced. Selling and customer-service costs depend on the number of customers that the customer and service functions are designed to support. Neither conversion costs or customer-service costs are affected by changes in actual volume. Luke Company has 46 customers in year 1 and 50 customers in year 2. The industry market size for high-end appliances increased 5% from year 1 to year 2. -What is the Luke Company's cost effect of growth component?

Lake Company manufactures small boats. Because its managers all have engineering backgrounds, they prefer nonfinancial information for their decision-making models. Therefore, they require the accountants gather data to assist in the examination of nonfinancial results of operations. The following information relates to the manufacture of a small boat. Required: a. What is the partial productivity for direct materials for each year? b. What is the partial productivity for direct manufacturing labour for each year? c. What is the total factor productivity for each year?

An analysis of Louis Brown Corporation's operating income changes between year 1 and year 2 show the following: Operating income for Year 1 $1,000,000 Add growth component 30,000 Add price-recovery component 200,000 Deduct productivity component (10,000) Operating income for Year 2 $1,220,000 Required: Is Louis Brown's operating income gain consistent with the product differentiation or cost leadership strategy? Explain briefly.

Use the information below to answer the following question(s). Following a strategy of product differentiation, Electronics Inc. makes a hand held calculator, II300. Electronics Inc. presents the following data for the years 1 and 2: Electronics Inc. produces no defective units but it wants to reduce direct materials usage per unit of II300 in year 2. Manufacturing conversion costs in each year depend on production capacity defined in terms of II300 units that can be produced. Selling and customer-service costs depend on the number of customers that the customer and service functions are designed to support. Neither conversion costs or customer-service costs are affected by changes in actual volume. Electronics Inc. has 23 customers in year 1 and 25 customers in year 2. The industry market size for hand held calculators increased 5% from year 1 to year 2. Of the $6 increase in unit selling price, $2 is due to a general increase in prices. -Required: a. What amount is the revenue effect of the growth component? b. What amount is the cost effect of the growth component? c. What is the net effect on operating income as a result of the growth component?

Match each of the following balanced scorecard measures with the appropriate perspective. -defect rates

Following a strategy of product differentiation, Sting Corporation makes a high-end computer monitor, CM7. Sting Corporation presents the following data for the years 2015 and 2016: Sting Corporation wants to reduce direct materials usage per unit of CM7 in 2016. Manufacturing conversion costs in each year depend on production capacity defined in terms of CM7 units that can be produced. Selling and customer-service costs depend on the number of customers that the customer and service functions are designed to support. Sting Corporation has 100 customers in 2015 and 115 customers in 2016. The industry market size for high-end computer monitors increased 5% from 2015 to 2016. Required: a. Calculate the effect on the change of operating income as a result of the productivity component. b. What is the partial productivity ratio for the direct materials for each year? (round to 4 decimal places) Give a plausible underlying reason for what may have caused the ratio to change. c. What is the total factor productivity for 2016 and the total factor productivity benchmark based on input costs that would have been used in 2015 to produce 2016 output?(round to 4 decimal places) d. Provide two key success factors, and a corresponding measure for each, that relate to Sting Corporation's internal business process balanced scorecard perspective.

Match each of the following balanced scorecard measures with the appropriate perspective. -customer satisfaction

Use the information below to answer the following question(s). Following a strategy of product differentiation, Luke Company makes a high-end Appliance, AP15. Luke Company presents the following data for the years 1 and 2. Luke Company produces no defective units but it wants to reduce direct materials usage per unit of AP15 in year 2. Manufacturing conversion costs in each year depend on production capacity defined in terms of AP15 units that can be produced. Selling and customer-service costs depend on the number of customers that the customer and service functions are designed to support. Neither conversion costs or customer-service costs are affected by changes in actual volume. Luke Company has 46 customers in year 1 and 50 customers in year 2. The industry market size for high-end appliances increased 5% from year 1 to year 2. -What is the Luke Company's operating income for year 1?

Use the information below to answer the following question(s). Following a strategy of product differentiation, Instruments Inc. makes a hand held calculator, II400. Instruments Inc. presents the following data for the years 1 and 2: Instruments Inc. produces no defective units but it wants to reduce direct materials usage per unit of II400 in year 2. Manufacturing conversion costs in each year depend on production capacity defined in terms of II400 units that can be produced. Selling and customer-service costs depend on the number of customers that the customer and service functions are designed to support. Neither conversion costs or customer-service costs are affected by changes in actual volume. Instruments Inc. has 23 customers in year 1 and 25 customers in year 2. The industry market size for hand held calculators increased 5% from year 1 to year 2. Of the $4 increase in unit selling price, $1 is due to a general increase in prices. -Required: a. What is the operating income for Year 1? b. What is the operating income in Year 2? c. What is the change in operating income from Year 1 to Year 2?