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

Answer the following questions using the information below: Argon Corp. had capacity to produce 15,000 units of L3 using 30,000 kg of direct materials. Argon produced 14,750 units of L3 by processing 27,500 kg of direct materials. Conversion cost per unit is $7.50. Argon can add or reduce manufacturing capacity in increments of 2,500 kgs. -What would be the cost savings if Argon decides to reduce manufacturing capacity by 2,500 kgs?

The customer perspective under the balanced scorecard approach would include measures on cost reduction.

Partial productivity and total factor productivity measures work best together because both measures have the same kind of strengths and weaknesses.

Which of the following statements is of true engineered costs?

Which of the following statements best relates to the balanced scorecard's financial perspective?

What are the four key perspectives in the balanced scorecard?

Buck Corporation plans to grow by offering a computer monitor,the CM3000 that is superior and unique from the competition.Buck believes that putting additional resources into R&D and staying ahead of the competition with technological innovations are critical to implementing its strategy. Required: a.Is Buck's strategy one of product differentiation or cost leadership? Explain briefly. Identify at least one key element that you would expect to see included in the balanced scorecard: b.for the financial perspective. c.for the customer perspective. d.for the internal business process perspective. e.for the learning and growth perspective.

________ is a measure of the balanced scorecard's internal-business-process perspective.

Fairytale Weddings manufactures wedding dresses.The following information relates to the manufacture of gowns in its Perth plant: 20X1 20X2 Units produced and sold 43,000 52,600 Direct manufacture labor-hours 22,000 26,000 Direct materials used (square yards) 130,000 152,000 Direct manufacture cost per hour \ 16 \ 17 Direct materials cost per yard \ 10 \ 11 Required: Prepare an analysis of change in annual costs from 20X1 to 20X2 including direct materials,direct manufacturing labor,and total inputs.

When analyzing the change in operating income,the strategy component of productivity ________.

Power Company 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 manufacture of remote control units for televisions,radios,and stereo components: 2011 2012 Remote control units produced and sold 80,000 100,000 Direct manufacture labor-hours 12,000 13,200 Direct materials used (sets) 80,600 100,500 Direct manufacture cost per hour \ 18 \ 20 Direct materials cost per set \ 31 \ 32 Required: a.What is the partial productivity of direct materials for each year? b.What is the partial productivity of direct manufacturing labor for each year? c.Did each area improve between 2011 and 2012? Explain. d.What will be the projected direct material and labor needs for 2013 if remote control units increase by 12,000 units,assuming Power Company applies the constant returns to scale technology?

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

Maloney Corporation manufactures plastic water bottles.It plans to grow by producing high-quality water bottles at a low cost that are delivered in a timely manner.There are a number of other manufacturers who produce similar water bottles.Maloney believes that continuously improving its manufacturing processes and having satisfied employees are critical to implementing its strategy. Required: a.Is Maloney's strategy one of product differentiation or cost leadership? Explain briefly. Identify at least one key element that you would expect to see included in the balanced scorecard: b.for the financial perspective. c.for the customer perspective. d.for the internal business process perspective. e.for the learning and growth perspective.

Explain the term cost leadership.What are the possible ways through which a company would try to become a cost leader? How far is it desirable to implement cost reduction measures?

Meale Company makes a household appliance with model number X500. The goal for 2015 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 X500 units that can be produced. The industry market size for appliances increased 10% from 2014 to 2015. The following additional data are available for 2014 and 2015: 2014 2015 Units of X500 produced and sold 10,000 11,000 Selling price \ 100 \ 95 Direct materials (square feet) 30,000 29,000 Direct material costs per square foot \ 10 \ 11 Manufacturing capacity for X500 (units) 12,500 12,000 Total conversion costs \ 250,000 \ 240,000 Conversion costs per unit of capacity \ 20 \ 20 -What is operating income for 2014?

Answer the following questions using the information below: Following a strategy of product differentiation, Arseniq Company makes a high-end Appliance, XT15. Arseniq presents the following data for the years 2014 and 2015: 2014 2015 Units of XT15 produced and sold 50,000 52,500 Selling price \ 500 \ 550 Direct materials (square feet) 150,000 153,750 Direct materials costs per square foot \ 50 \ 55 Manufacturing capacity in units of XT15 62,500 62,500 Total conversion costs \ 6,250,000 \ 6,875,000 Conversion costs per unit of capacity \ 100 \ 110 Selling and customer-service capacity (customers) 150 150 Total selling and customer-service costs \ 2,250,000 \ 2,343,750 Selling and customer-service capacity cost per customer \ 15,000 \ 15,625 Arseniq 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. Arseniq had 140 customers in 2014 and 145 customers in 2015. -What is the change in operating income from 2014 to 2015?

Downsized capacity is the amount of productive capacity available over and above the productive capacity employed to meet customer demand in the current period.

Which of the following statements is true of discretionary costs?

A company pursuing cost leadership may try to further analyze the change in operating income even when the growth component is highly favorable.Why?

Which of the following statements is true of successfully implementing a balanced scorecard?