Exam 13: Strategy, Balanced Scorecard, and Profitability Analysis

Companies that have been successful at cost leadership will show large favorable price-recovery and growth components when analyzing profitability.

Which of the following is NOT a force that shapes an organization's competitive environment?

________ translates an organization's mission and strategy into a comprehensive set of performance measures that provides the framework for implementing its strategy.

Answer the following questions using the information below: Merrill Company makes a household appliance with model number X800.The goal for Year 2 is to reduce direct materials usage per unit.No defective units are currently produced.Manufacturing conversion costs depend on production capacity defined in terms of X800 units that can be produced.The industry market size for appliances increased 5% from Year 1 to Year 2.The following additional data are available for Years 1 and 2: -What is the Merrill Company's cost effect of the growth component for direct materials?

Distance Company has been unhappy with the financial accounting variances that its cost accounting system has been producing, because its managers believe that there is more to evaluating an operation than just examining accounting numbers.Therefore, it has started gathering data to assist in the examination of nonfinancial results of operations.The following information relates to the manufacture of remote control units for televisions, radios, and stereo components: Required: a.What is the partial productivity of direct materials for each year? b.What is the partial productivity of direct manufacturing labour for each year? c.Did each area improve between Year 1 and Year 2? Explain. d.What will be the projected direct material and labour needs for Year 3 if remote control units increase by 12,000 units, assuming Distance Company applies the constant returns to scale technology?

________ is the ratio of the quantity of output produced to the costs of all inputs used, where the inputs are combined on the basis of current period prices.

Use the information below to answer the following question(s).Following a strategy of product differentiation, Barry Company makes an XX 300.Barry Company presents the following data for the years 1 and 2. Barry Company produces no defective units but it wants to reduce direct materials usage per unit of XX 300 in year 2.Manufacturing conversion costs in each year depend on production capacity defined in terms of XX 300 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.Barry Company has 23 customers in year 1 and 25 customers in year 2.The industry market size for high-end appliances increased 5% from year 1 to year 2. -What is the Barry Company's cost effect of growth component?

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

Use the information below to answer the following question(s).Following a strategy of product differentiation, Barry Company makes an XX 300.Barry Company presents the following data for the years 1 and 2. Barry Company produces no defective units but it wants to reduce direct materials usage per unit of XX 300 in year 2.Manufacturing conversion costs in each year depend on production capacity defined in terms of XX 300 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.Barry Company has 23 customers in year 1 and 25 customers in year 2.The industry market size for high-end appliances increased 5% from year 1 to year 2. -________ measures the change in operating income attributable solely to changes in a company's profit margins between years one and two.

Explain the product differentiation and the cost leadership strategies.

Can a company identify unused capacity and, if so, how can unused capacity be managed?

Successful reengineering involves all of the following EXCEPT

Use the information below to answer the following question(s).Following a strategy of product differentiation, Barry Company makes an XX 300.Barry Company presents the following data for the years 1 and 2. Barry Company produces no defective units but it wants to reduce direct materials usage per unit of XX 300 in year 2.Manufacturing conversion costs in each year depend on production capacity defined in terms of XX 300 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.Barry Company has 23 customers in year 1 and 25 customers in year 2.The industry market size for high-end appliances increased 5% from year 1 to year 2. -What is the Barry Company's net increase in operating income as a result of the growth component?

Westcoast Ltd.provided the following information: What is the total factor productivity ratio?

The productivity component measures the reduction in costs attributable to a reduction in the quantity of inputs used in year 2 relative to the quantity of inputs that would have been used in year 1 to produce the year 2 output.

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 in Year 2?

Reengineering benefits are most significant when they focus on one business function rather than crossing functional lines of the business process.

Electronics Inc.has been unhappy with the financial accounting variances that its cost accounting system has been producing, because its managers believe that there is more to evaluating an operation than just examining accounting numbers.Therefore, it has started gathering data to assist in the examination of nonfinancial results of operations.The following information relates to the manufacturing of remote control units for televisions, radios, and stereo components: Required: a.What is the partial productivity of direct materials for each year? b.What is the partial productivity of direct manufacturing labour for each year? c.Did each area improve between year 1 and year 2? Explain. d.What will be the projected direct material and labour needs for year 3 if remote control units increase by 3,000 units, assuming Electronics, Inc.applies the constant returns to scale technology?

The productivity component of operating income focuses exclusively on revenues.

Answer the following questions using the information below: Merrill Company makes a household appliance with model number X800.The goal for Year 2 is to reduce direct materials usage per unit.No defective units are currently produced.Manufacturing conversion costs depend on production capacity defined in terms of X800 units that can be produced.The industry market size for appliances increased 5% from Year 1 to Year 2.The following additional data are available for Years 1 and 2: -What is the Merrill Company's cost effect of the growth component for conversion costs?