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. -Referring to Luke Company,which of the following is a measure of the customer perspective?

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?

Germaine Company provided the following information. What is the partial productivity ratio?

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 cost effect of price-recovery component?

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

Answer the following questions using the information below: Merrill Company makes a household appliance with model number X800.The goal for Year 2 is to reduce direct materials usage per unit.No defective units are currently produced.Manufacturing conversion costs depend on production capacity defined in terms of X800 units that can be produced.The industry market size for appliances increased 5% from Year 1 to Year 2.The following additional data are available for Years 1 and 2: -What is the Merrill Company's cost effect of the growth component for conversion costs?

The price-recovery component measures the increase in operating income from selling more units of a product.

Strategy requires integration of product and process development.

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: 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.

Which of the following BEST describes the effect of uncertainty?

________ is an organization's ability to achieve low costs relative to competitors through productivity and efficiency improvements,elimination of waste,and tight cost control.

To achieve a cost leadership strategy companies may need to improve their internal production processes to increase yield.

To evaluate the success of its strategy,a company can subdivide the change in costs into growth,price-recovery and productivity components.

An organization that is using the cost leadership approach would

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

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 revenue effect of growth component?

Answer the following questions using the information below: Merrill Company makes a household appliance with model number X800.The goal for Year 2 is to reduce direct materials usage per unit.No defective units are currently produced.Manufacturing conversion costs depend on production capacity defined in terms of X800 units that can be produced.The industry market size for appliances increased 5% from Year 1 to Year 2.The following additional data are available for Years 1 and 2: -What is the Merrill Company's revenue effect of the growth component?

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

Engineered costs result specifically from a clear cause-and-effect relationship between output and the resources needed to produce that 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. -What is the Luke Company's revenue effect of price-recovery component?