Exam 13: Strategy, Balanced Scorecard, and Profitability Analysis

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 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? d.What amount is the revenue effect of growth component? e.What amount is the cost effect of growth component? f.What is the change in operating income as a result of the growth component? g.What amount is the revenue effect of price recovery component? h.What amount is the cost effect of price recovery component? i.What is the change in income as a result of the price recovery component? j.What is the amount of the productivity component? k.The change in operating income from cost leadership.l.The change in operating income due to industry wide effects.m.The effect of product differentiation on operating income and a summarization of the change in operating income between Year 1 and Year 2.

Rocket Data Ltd.is an internet service provider.The company had 14,000,000 subscribers in 2019, and employed 18 customer service representatives.During 2019 each customer service representative worked 7 1/2 hours per day for 236 days at a fixed annual salary of $42,000.The company received 110,000 telephone calls from its customers in 2019 that lasted fifteen minutes on average.Required: Calculate the cost of unused customer service capacity in 2019 with the assumption that customer service costs are engineered costs.

Strategy requires integration of product and process development.

Which of the following is NOT true of a good balanced scorecard?

The purpose of the balanced scorecard is BEST described as helping an organization

________ is the fundamental rethinking and redesign of business processes to achieve improvements in critical measures of performance such as cost, quality, service, speed, and customer satisfaction.

Which of the following statements is TRUE concerning productivity measures?

An organization that is using the product differentiation approach would

Discretionary costs arise from periodic (usually yearly)decisions regarding the maximum amount to be incurred.

Which of the following statements about productivity measures is TRUE?

Which of the following is a major advantage of total factor productivity?

Surveys of employee satisfaction is a potential measure of the

When implementing a balanced scorecard, one should assume the cause-and-effect linkage to be precise.

An analysis of Gardner Corporation's operating income changes between Year 1 and Year 2 show the following: Required: Is Gardner's operating income gain consistent with the product differentiation or cost leadership strategy? Explain briefly.

Cost leadership is an organization's ability to offer products or services that are perceived by its own customers as being superior and unique relative to those of its competitors.

In general, profit potential increases with greater competition, stronger potential entrants, products that are similar, and tougher customers and suppliers.

Reengineering is the fundamental rethinking and redesign of business processes to achieve improvements in critical measures of performance such as cost, quality, service, speed, and customer satisfaction.

Infrastructure costs are generally variable in nature.

One way to eliminate unused capacity is to downsize.

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. -Referring to Luke Company, which of the following is an objective of the learning and growth perspective?