Question 1

Describe the four common perspectives that are used in the balanced scorecard.

Accepted Answer

The answer of Describe the four common perspectives that are...

Question 2

Beach Co. has provided the following information for last year:
 $$\begin{array} { l r r } 
\text { Material costs } & \$ 160,000 \
\text { Labor costs } & \$ 62,000 \
\text { Overhead costs } & \$ 171,000 \
\text { Product produced } & 11,000 & \text { @ selling price of } \$ 52 / \text { each }
\end{array}$$ 
Required:
Calculate the total factor productivity measure.

Accepted Answer

The answer of Beach Co. has provided the following information...

Question 3

Consider a local coffee shop, a Starbucks store, and a retail gas station that offers fresh coffee in its convenience stores.
Required:
Characterize these stores according to the Porter strategy framework.

Accepted Answer

The answer of Consider a local coffee shop, a Starbucks...

Question 4

Describe the difference between a company's mission statement and its business-level strategy.

Accepted Answer

The answer of Describe the difference between a company's mission...

Question 5

Colbyville Co. has provided the following information for last year:
 $$\begin{array} { l r l } 
\text { Pounds of input } & 35,000 & @ \$ 17 / \text { pound } \
\text { Lubor hours } & 8,000 & @ \$ 26 / \text { hour } \
\text { Overhead costs } & \$ 142,000 & \
\text { Units of output produced } & 15,000 & @ \text { selling price of } \$ 85 / \text { rrit }
\end{array}$$ 
Required:
Calculate the total factor productivity measure.

Accepted Answer

The answer of Colbyville Co. has provided the following information...

Question 6

During the most recent month at Harrison Corporation, storing time was 3.0 days, inspection time was 0.8 days, processing time was 2.8 days, and moving time was 0.6 days.
Required:
a. Compute the manufacturing cycle time.
b. Compute the manufacturing cycle efficiency.
c. What percentage of the production time is spent in non-value-added activities?

Accepted Answer

The answer of During the most recent month at Harrison...

Question 7

Granite Manufacturing produces high-end furniture products for the luxury hotel industry. Granite has succeeded through excellence in design, careful attention to quality in manufacturing and in customer service, and through continuous product innovation. The manufacturing process at Granite begins with a close consultation with each customer so that the finished product exactly meets the customer's specifications. This commonly means unique designs, special fabrics, and high levels of manufacturing quality. In addition, Granite believes that a key competitive edge it has over other competitors is that it has an outstanding design staff that is able to work with customers to come up with product designs that go beyond the customer's expectations.
Required:
Present a balanced scorecard for Granite Manufacturing with 3-4 perspectives and 3-4 quantitative critical success factors (CSFs) in each perspective.

Accepted Answer

The answer of Granite Manufacturing produces high-end furniture products for...

Question 8

Karin Corporation keeps track of the time required to fill orders. The times required for a particular order appear below:
 $$\begin{array} { | l | r | } 
\hline & \text { Hours } \
\hline \text { Processing Time } & 0.6 \
\hline \text { Irspection Tirne } & 0.3 \
\hline \text { Moving Time } & 2.1 \
\hline \text { Storing Time } & 8.4 \
\hline
\end{array}$$ 
Required:
a. Determine the manufacturing cycle time. Show your work.
b. Determine the manufacturing cycle efficiency. Show your work.

Accepted Answer

The answer of Karin Corporation keeps track of the time...

Question 9

Melbourne, Inc. has provided the following information for last year:
 $$\begin{array} { l r l } 
\text { Pounds of input } & 42,000 & @ \$ 18 / \text { pound } \
\text { Labor hours } & 11,000 & @ \$ 24 / \text { hour } \
\text { Overhead costs } & \$ 187,000 & \
\text { Units of output produced } & 33,000 & @ \text { selling price of } \$ 85 / \text { rrit }
\end{array}$$ 
Required:
Calculate the partial productivity for:
a. Metal.
b. Labor.

Accepted Answer

The answer of Melbourne, Inc. has provided the following information...

Question 10

For each of the following jobs, identify a possible nonfinancial performance measure.
(a) Computer help desk worker at your university.
(b) Dental hygienist.
(c) Airline gate agent.
(d) City bus driver.

Accepted Answer

The answer of For each of the following jobs, identify...

Question 11

Melbourne Inc., has provided the following information for last year:
 $$\begin{array} { l r l } 
\text { Pounds of input } & 42,000 & @ \$ 18 / p o u n d \
\text { Labor hours } & 11,000 & @ \$ 24 / \text { hour } \
\text { Overhead costs } & \$ 187,000 & \
\text { Units of output produced } & 33,000 & @ \text { selling price of } \$ 60 / \text { unit }
\end{array}$$ 
Required:
Calculate the total factor productivity measure.

Accepted Answer

The answer of Melbourne Inc., has provided the following information...

Question 12

Consider the following management activities:
∙ Choose the organization's long-term strategy.
∙ Plan and organize the use of resources into efficient operations.
∙ Implement plans and organizational change.
∙ Measure and report results.
∙ Define the organization's scale and scope of operations.
Required:
a. Identify the sequence in which the decisions must be carried out. Why is it important to carry out these activities sequentially?
b. How can an effective cost management system support the above activities?

Accepted Answer

The answer of Consider the following management activities:
∙ Choose the...

Question 13

Studebaker Corporation, one of the earliest auto manufacturers, prospered in the late 1940s and into the 1950s. Its advertising after World War II emphasized quality of design and production. The corporation also used the stability of its work force in its advertisements, often featuring pictures of father and son working side by side in its factories.
Required:
a. From just this brief description of Studebaker Corporation, which type of competitive strategy-cost leadership or differentiation-would you guess Studebaker was using? Explain your choice.
b. Given your answer in Part (a), speculate on what market factors might have caused the corporation to go into bankruptcy and cease production in the mid-1960s.

Accepted Answer

The answer of Studebaker Corporation, one of the earliest auto...

Question 14

Sam Almasi, the CEO of Almasi Technologies Inc. (ATI), a biotechnology firm had recently returned from a conference on modern cost management and performance measurement methods where he was exposed to target costing, value-chain analysis, balanced scorecard, activity-based management, and other ideas.
ATI is a five-year old company operating in a growing, but competitive market. It develops and produces a number of different enzymes for use by research scientists and pharmaceutical companies. Its main competitors are also small to medium-sized firms just like ATI. The key to growth in this industry is the ability to develop new products in a short time. Gail Stevenson, the vice-president (VP) for research & development (R&D), has noticed that some of ATI's new developments did not perform well because of the delays in their introduction into the market. Stevenson is very keen on hiring the best scientists and ensuring that they stay current in their fields because knowledge is the key competitive weapon in the biotechnology industry.
Bob Phillips, the controller of ATI, had another concern. He has been noticing that the new products were not only delayed but their actual development costs were usually higher than budgeted. One of his goals was to see that the new products were profitable for the company.
Linda Joseph, the production manager, had a different concern of her own. Based on her observation, the production of the new enzymes was taking longer. Her feeling was that the products spent too much time in the quality control (QC) department. Barry Laker, the manager of the QC department, argued that the new enzymes lacked the rigorous specifications that are demanded in the marketplace. Consequently, the QC department has to perform additional tests to get to the root cause of the problems.
Almasi had heard complaints from all quarters, and decided to convene a meeting of all the department heads.
Almasi: Good afternoon, everyone. I am troubled that despite hiring a number of talented scientists, we are unable to compete effectively in the marketplace. Many of the recent entrants in the game seem to be beating us easily.
Stevenson: Sam, the key to our growth is rapid introduction of new products. Although my scientists are developing new enzymes in record times, they seem to be getting held up in manufacturing, and especially, the QC department.
Laker: Sam, I think I can pinpoint the root cause of the problem. I agree that our scientists are developing new enzymes in record times, but they do not seem to be paying any attention to standards. It looks like my department will have to provide training to them regarding quality control matters.
Stevenson: With due respect, I do not think there is more to know about QC standards. It looks like the QC department wants more attention and is therefore creating all this unnecessary fuss.
Joseph: I think I will agree with Barry that there are problems at the R&D side. My production scientists are also complaining that adequate specifications have not been developed; they have to constantly phone their R&D counterparts for clarifications.
Stevenson: I do not believe that the production problems can be attributed to R&D. I have personally screened each and every scientist during the hiring process.
Phillips: I don't think we will make much progress as a company if we keep pointing fingers at one another. We all must realize that all problems, regardless of their origin, finally affect the bottom-line of our company. Unless we set aside our differences and work together as a team, we will be unable to compete with our rivals. Some of our competitors follow best practices, which we must try to emulate.
Almasi: I agree with Bob. We must all look for solutions. I recently attended a conference where noted speakers talked about the value-chain of a company, interrelationships between functions, and the balanced scorecard. In fact, some speakers suggested that companies must stop discussing in terms of individual functions or departments; instead they must talk in terms of processes and understand linkages among all the processes that exist in an organization. I believe there are a number of ideas that we could adopt. I will leave the conference proceedings in the library, and suggest that we all read about these different topics. How about getting together after six weeks and discussing a plan of action? Thank you and see you all after six weeks.
Required:
Assume the role of a consultant preparing a report for ATI. Discuss the following aspects in your report:
a. The internal value-chain of ATI.
b. The balanced scorecard. Identify the goals of the company under each perspective of the scorecard and cause-effect relationships, and develop potential measures that could be used.
c. How the inter-departmental differences can be eliminated.

Accepted Answer

The answer of Sam Almasi, the CEO of Almasi Technologies...

Question 15

Indiatlantic Corporation's management keeps track of the time it takes to process orders. During the most recent month, the following average times were recorded per order:
 $$\begin{array} { | l | r | } 
\hline & \text { Hours } \
\hline \text { Processing Time } & 1.1 \
\hline \text { Inspection Tirne } & 0.4 \
\hline \text { Moving Time } & 0.8 \
\hline \text { Storing Time } & 4.8 \
\hline
\end{array}$$ 
Required:
a. Compute the manufacturing cycle time.
b. Compute the manufacturing cycle efficiency.
c. What percentage of the production time is spent in non-value-added activities?

Accepted Answer

The answer of Indiatlantic Corporation's management keeps track of the...

Question 16

Explain how producing more units than can be sold can increase operating income. Would this be an issue in a service company or is it only an issue in a manufacturing environment? Could a company employ this strategy indefinitely to show continuous increases in profits?

Accepted Answer

The answer of Explain how producing more units than can...

Question 17

Levi Strauss and Co., maker of Levi's familiar 501 and 505 brands of jeans, also makes a "Signature" brand that was introduced several years ago for discount retailers such as Walmart. Levi's strategy with the new jeans was to sell a competitively priced pair. The jeans were to be about one-half the price of the familiar 501 and 505 jeans. To get costs down Levi would:
∙ Use cheaper fabrics and materials.
∙ Shun costly mass-market advertising.
∙ Strictly limit the number of fits, styles, and colors.
The Signature brand had a good first year of sales; assume that results for the second year and later are not yet in.
Required:
a. Assess the new strategy at Levi. What do you think are the potential benefits and risks?
b. How will the firm's value chain and balanced scorecard change as a result of the new strategy?

Accepted Answer

The answer of Levi Strauss and Co., maker of Levi's...

Question 18

Jackie Horner started Glad Rags to combine fashion and sustainability. The original production of sandals made from recycled plastic has expanded to a complete line of casual footwear. Current sales total over $2 million. Jackie hired the firm's first controller early this year, and has asked him to detail suggestions for ways to increase profits. Thomas Roberts, the new controller, has compiled a list of recommended changes that focus on quality improvements. Glad Rags' customers expect high quality at a low price, a "value" product. So, the company must simultaneously watch costs and quality. After receiving his list of suggestions, Jackie calls Thomas to her office and says, "I don't see how improving quality can increase productivity. In fact, it seems to me that efforts to improve quality will slow down production and decrease productivity."
Required:
Using specific examples, help Thomas explain to Jackie why efforts to improve quality can also boost productivity. How does productivity play a role in the firm's strategy and competitive environment?

Accepted Answer

The answer of Jackie Horner started Glad Rags to combine...

Question 19

Michael Corporation's management reports that its average manufacturing cycle time is 6.3 days, its manufacturing cycle efficiency is 0.27, its average move time is 0.1 day, and its average storage time is 3.9 days.
Required:
a. What is the process time?
b. What is the inspection time?

Accepted Answer

The answer of Michael Corporation's management reports that its average...

Question 20

What is a business model?

Accepted Answer

The answer of What is a business model?...

Quiz 18: Performance Measurement to Support Business Strategy

Describe the four common perspectives that are used in the balanced scorecard.

Consider a local coffee shop, a Starbucks store, and a retail gas station that offers fresh coffee in its convenience stores. Required: Characterize these stores according to the Porter strategy framework.

Describe the difference between a company's mission statement and its business-level strategy.

For each of the following jobs, identify a possible nonfinancial performance measure. (a) Computer help desk worker at your university. (b) Dental hygienist. (c) Airline gate agent. (d) City bus driver.

Explain how producing more units than can be sold can increase operating income. Would this be an issue in a service company or is it only an issue in a manufacturing environment? Could a company employ this strategy indefinitely to show continuous increases in profits?

Michael Corporation's management reports that its average manufacturing cycle time is 6.3 days, its manufacturing cycle efficiency is 0.27, its average move time is 0.1 day, and its average storage time is 3.9 days. Required: a. What is the process time? b. What is the inspection time?

What is a business model?