Exam 12: Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Excellent Mugs Inc. produced 1,600,000 units in 2017 at a units of output per dollar of input cost was $0.09. Its cost of input at 2017 prices that would have been used in 2016 was $20,000,000. How much did the total factor productivity (TFP) increase as a result of 2017 operations?

Following a strategy of product differentiation, Somerset Corporation makes a high-end computer monitor, CM7. Somerset Corporation presents the following data for the years 2017 and 2018: Somerset Corporation produces no defective units but it wants to reduce direct materials usage per unit of CM7 in 2017. 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. Ernsting Corporation has 100 customers in 2017 and 115 customers in 2018. The industry market size for high-end computer monitors increased 5% from 2017 to 2018. Required: a.What is the revenue effect of the price-recovery component? b.What is the cost effect of the price-recovery component? c.What is the net effect on operating income as a result of the price-recovery component? d.What is the net effect on operating income as a result of the productivity component?

Which of the following statements best define a product differentiation strategy?

The productivity component measures the amount by which operating income increases by using inputs efficiently to lower costs.

Successful implementation of a cost leadership strategy will result in ________.

Stewart Corporation plans to grow by offering a sound system, the SS3000, that is superior and unique from the competition. Stewart believes that putting additional resources into R&D and staying ahead of the competition with technological innovations is critical to implementing its strategy. Which of the following terms best describes Stewart's strategy?

Total factor productivity (TFP) is easy to compute for a single-product company. When dealing with a multiproduct company, one of two adjustments must be made. What are these potential adjustments?

Following a strategy of product differentiation, Izzy's Limited Company makes a high-end Appliance, XT15. Izzy's Limited presents the following data for the years 2017 and 2018: Izzy's Limited produces no defective units but it wants to reduce direct materials usage per unit of XT15. Manufacturing conversion costs in each year depend on production capacity defined in terms of XT15 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. Izzy's Limited had 160 customers in 2017 and 165 customers in 2018. What is the net effect on operating income as a result of the price-recovery component? (Round any intermediary calculations to two decimals and your final answer to the nearest dollar.)

The first step to successful balanced scorecard implementation is clarifying the ________.

Which of the following could be a measure of the balanced scorecard's financial perspective?

Engineered costs result from a cause-and-effect relationship between the cost driver output and the resources used to produce that output.

In 2017, Commodity Inc., processor of whole grain flour, had the capacity to produce 10,000,000 pounds of product at a conversion cost per pound of $0.20. The conversion cost per pound was $0.15 in 2016 (the previous year). The direct material cost per pound for both years was $0.07 per pound and in 2017, Commodity Inc. produced 9,300,000 pounds while actual production for the previous year was 8,600,000 pounds. What was the cost of unused capacity in 2017?

Manufacturing overhead cost is an example of indirect engineered costs.

What are the four key perspectives in the balanced scorecard?

Balanced scorecards show reveal as many measures as possible to connect objectives with measures and initiatives to help assure the success of the enterprise.

In general, profit potential of an organization decreases with ________.

An organization that is using the cost leadership approach would ________.

Which of the following is the correct mathematical expression to calculate a benchmark total factor productivity?

Engineered costs ________.

In a strategy map, a strategic objective where many ties spur out from it resulting in the achievement of many strategic objectives is called ________.