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

Following a strategy of product differentiation,Sting Corporation makes a high-end computer monitor,CM7.Sting Corporation presents the following data for the years 2012 and 2013: 2012 2013 Units of CM 7 produced and sold 5,000 5,500 Selling price \ 400 \ 440 Direct materials (pounds) 15,000 15,375 Direct materials costs per pound \ 40 \ 44 Manufacturing capacity for CM7 (units) 10,000 10,000 Conversion costs \ 1,000,000 \ 1,100,000 Conversion costs per unit of capacity \ 100 \ 110 Selling and customer-service capacity (customers) 60 58 Total selling and customer-service costs \ 360,000 \ 362,500 Selling and customer-service capacity cost per customer \ 6,000 \ 6,250 Sting Corporation produces no defective units but it wants to reduce direct materials usage per unit of CM7 in 2013.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.Sting Corporation has 100 customers in 2012 and 115 customers in 2013.The industry market size for high-end computer monitors increased 5% from 2012 to 2013. Required: a.What is operating income for 2012? b.What is operating income in 2013? c.What is the change in operating income from 2012 to 2013?

Assuming previous year's production capacity was adequate to produce current year output,the cost effect of growth for fixed costs is calculated by multiplying the difference between ________ by price per unit of capacity in the previous year.

Answer the following questions using the information below: Strategic Analysis of Profitability of Ransham Company: $\begin{array}{|l|l|l|l|l|l|}\hline&\text { Income } & \text { Revenueand } & \text { Revenueand } & & \\&\text { Statement } & \text { Cost Effects } & \text { Cost Effects of } & \text { Cost Effect of } & \text { Income } \\&&\text { of Growth } & \text { Price-Recovery } & \text { Productivity } & \text { Statement } \\\text { Amounts } & \text { Component } & \text { Component } & \text { Component } & \text { Amounts } \\&\text { in 2014 } & \text { in 2015 } & \text { in 2015 } & \text { in 2015 } & \text { in 2015 } \\\hline \text { Revenues }(\$) & 34,000 & 10,000 \mathrm{~F} & 1,000 \mathrm{U} & (\mathrm{b}) & (\mathrm{e}) \\\hline \text { Costs } & 23,500 & (\mathrm{a}) & 500 \mathrm{U} & \text { (c) } & 26,100 \\\hline \text { Operating } & & & & & \\\text { income } & 10,500 & 5,500 \mathrm{~F} & 1,500 \mathrm{U} & 2,400 \mathrm{~F} & \text { (d) } \\\hline\end{array}$ -What is the cost effect of the productivity component (c)?

________ have no measurable cause-and-effect relationship between output and resources used.

An organization that is using the product differentiation approach would ________.

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

An analysis of Terbolt Corporation's operating income changes between 2015 and 2016 show the following: Operating income for 2015 \ 4,750,000 Add growth component 75,000 Add price-recovery component 398,000 Deduct productivity component (50,000) Operating income for 2016 \5 ,173,000 Required: Is Terbolt's operating income gain consistent with the product differentiation or cost leadership strategy? Explain briefly.

Advertising cost is an example of a discretionary cost.

Boron Company provided the following information: Budgeted input 82,000 gallons Actual input 82,800 gallons Budgeted production 80,000 units Actual production 81,500 units What is the partial productivity ratio?

Productivity describes the relationship between different quantities of inputs consumed and the quantities of output produced.

Which component of strategy measures the changes in operating income attributed solely to an increase in the quantity of output between Year 1 and Year 2?

The customer perspective of the balanced scorecard focuses on the success of the company in its target market.

Mintol Company provided the following information: Budgeted input 72,000 gallons Actual input 90,000 gallons Budgeted production 30,000 units Actual production 28,500 units What is the partial productivity ratio?

One problem with total factor productivity revolves around the measurement of combined productivity of all inputs.

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 revenue effect of the growth component?

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

Which of the following is the correct mathematical expression to calculate partial productivity?

While doing industry analysis on five forces,which of the following is a force that shapes an organization's profit potential?

A good balanced scorecard tells the story of a company's strategy,articulating a sequence of cause-and-effect relationships-the links among the various perspectives that align implementation of the strategy.

Answer the following questions using the information below: Nicolt Company produced 120,000 sport jackets during 2015 and 480,000 direct manufacturing labor-hours were used at $2 per hour.The conversion costs were $1.2 per jackets produced. -What is the total factor productivity for Nicolt Company?