Exam 13: Strategy, Balanced Scorecard, and Profitability Analysis

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?

The price-recovery component of a change in operating income from one year to the next measures the increase in operating income from selling more units of the product.

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.

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?

Downsizing often means eliminating jobs, which can have an adverse effect on employee morale.

Describe three key balanced scorecard components in doing a strategic analysis of operating income.

What are the four key perspectives in the balanced scorecard?

Identify and explain Porter's Five Forces model.

Research and development cost is an example of an engineered cost.

Which of the following statements is true concerning productivity?

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

An organization that is using the cost leadership approach would

Uncertainty refers to the possibility that an actual amount will be equal to an expected amount.

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

________ measures the reduction in costs attributable to a reduction in the quantity of inputs used in year two relative to the quantity of inputs that would have been used in year one to produce the year two 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. -Which of the following is an objective of the learning and growth perspective?

Use the information below to answer the following question(s). Following a strategy of product differentiation, Ernsting Ltd. makes high quality electronic components. Ernsting Ltd. presents the following data for the past two years relating to its XJ649 product. Ernsting produces no defective units but it wants to reduce direct materials usage per unit in Year 2 Manufacturing conversion costs in each year depend on production capacity defined in terms of 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. Ernsting has 60 customers in Year 1 and 66 customers in Year 2. The industry market size for the product increased 6% from Year 1 to Year 2. Of the $50 increase in unit selling price, $30 is attributable to a general price increase. -Required: Present the following, a. The change in operating income from cost leadership. b. The change in operating income due to industry wide effects. c. The effect of product differentiation on operating income and a summarization of the change in operating income between Year 1 to Year 2.

What is the direct manufacturing labour partial productivity, assuming 10,000 units were produced during the year and 40,000 direct manufacturing labour-hours were used?

Strategies have been classified in many different ways, but what is common is to set the business within its external environment.

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 operating income for year 1?