Exam 13: Strategy,balanced Scorecard,and Profitability Analysis

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 change in operating income from year 1 to year 2?

Ralph Company has been very aggressive in developing various types of financial and nonfinancial measurement schemes to help with the evaluation of its manufacturing processes.It appears that some of the managers are suboptimizing in that their decision processes are geared solely for their department's benefit,sometimes to the detriment of the organization as a whole. Required: What changes in the evaluation system could the company implement to help minimize the suboptimization of the managers' decision-making process?

Measures of the balanced scorecard's internal business process perspective include all of the following EXCEPT

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

The number of complaints about the company's product is a potential measure of the

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 amount is the revenue effect of price recovery component? b.What amount is the cost effect of price recovery component? c.What is the change in income as a result of the price recovery component?

Which of the following would result in an increase in total factor productivity,assuming all other variables are held constant?

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.

Use the information below to answer the following question(s). Following a strategy of product differentiation,Instruments Inc.makes a hand held calculator,II400.Instruments Inc.presents the following data for the years 1 and 2: Instruments Inc.produces no defective units but it wants to reduce direct materials usage per unit of II400 in year 2.Manufacturing conversion costs in each year depend on production capacity defined in terms of II400 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.Instruments Inc.has 23 customers in year 1 and 25 customers in year 2.The industry market size for hand held calculators increased 5% from year 1 to year 2.Of the $4 increase in unit selling price,$1 is due to a general increase in prices. -Required: a.What amount is the revenue effect of the growth component? b.What amount is the cost effect of the growth component? c.What is the net effect on operating income as a result of the growth component?

Use the information below to answer the following question(s). Following a strategy of product differentiation,Electronics Inc.makes a hand held calculator,II300.Electronics Inc.presents the following data for the years 1 and 2: Electronics Inc.produces no defective units but it wants to reduce direct materials usage per unit of II300 in year 2.Manufacturing conversion costs in each year depend on production capacity defined in terms of II300 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.Electronics Inc.has 23 customers in year 1 and 25 customers in year 2.The industry market size for hand held calculators increased 5% from year 1 to year 2.Of the $6 increase in unit selling price,$2 is due to a general increase in prices. -Required: a.What is the net effect on operating income as a result of the productivity component?

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.

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 nor 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: a.What amount is the revenue effect of the growth component? b.What amount is the cost effect of the growth component? c.What is the net effect on operating income as a result of the growth component?

The lower the inputs for a given set of outputs or the higher the outputs for a given set of inputs,the higher the level of

The ratio of the quantity of output produced divided by the quantity of a single input used,is called

Infrastructure costs are generally variable in nature.

Successful reengineering efforts generally involve changing the roles and responsibilities of employees.

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?

Which of the following statements about productivity measures is TRUE?

Partial productivity multiplied by the quantity of input used results in