Balanced scorecard. Vic Corporation manufactures various types of color laser printers in a highly automated facility with high fixed costs. The market for laser printers is competitive. The various color laser printers on the market are comparable in terms of features and price. Vic believes that satisfying customers with products of high quality at low costs is important to achieving its target profitability. For 2017, Vic plans to achieve higher quality and lower costs by improving yields and reducing defects in its manufacturing operations. Vic will train workers and encourage and empower them to take the necessary actions. Currently, a significant amount of Vic’s capacity is used to produce products that are defective and cannot be sold. Vic expects that higher yields will reduce the capacity that Vic needs to manufacture products. Vic does not anticipate that improving manufacturing will automatically lead to lower costs because many costs are fixed costs. To reduce fixed costs per unit, Vic could lay off employees and sell equipment, or it could use the capacity to produce and sell more of its current products or improved models of its current products.
Vic’s balanced scorecard (initiatives omitted) for the just-completed fiscal year 2017 follows.
- 1. Was Vic successful in implementing its strategy in 2017? Explain.
Required
- 2. Is Vic’s balanced scorecard useful in helping the company understand why it did not reach its target market share in 2017? If it is, explain why. If it is not, explain what other measures you might want to add under the customer perspective and why.
- 3. Would you have included some measure of employee satisfaction in the learning-and-growth perspective and new-product development in the internal-business-process perspective? That is, do you think employee satisfaction and development of new products are critical for Vic to implement its strategy? Why or why not? Explain briefly.
- 4. What problems, if any, do you see in Vic improving quality and significantly downsizing to eliminate unused capacity?
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Chapter 12 Solutions
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
- Balanced scorecard. Vic Corporation manufactures various types of color laser printers in a highly automated facility with high fixed costs. The market for laser printers is competitive. The various color laser printers on the market are comparable in terms of features and price. Vic believes that satisfying customers with products of high quality at low costs is important to achieving its target profitability. For 2017, Vic plans to achieve higher quality and lower costs by improving yields and reducing defects in its manufacturing operations. Vic will train workers and encourage and empower them to take the necessary actions. Currently, a significant amount of Vic’s capacity is used to produce products that are defective and cannot be sold. Vic expects that higher yields will reduce the capacity that Vic needs to manufacture products. Vic does not anticipate that improving manufacturing will automatically lead to lower costs because many costs are fixed costs. To reduce fixed costs…arrow_forwardBalanced scorecard. Pineway Electric manufactures electric motors. It competes and plans to grow by selling high-quality motors at a low price and by delivering them to customers in a reasonable time after receiving customers’ orders. There are many other manufacturers who produce similar motors. Pineway believes that continuously improving its manufacturing processes and having satisfied employees are critical to implementing its strategy in 2017. Q.Ramsey Corporation, a competitor of Pineway, manufactures electric motors with more sizes and features than Pineway at a higher price. Ramsey’s motors are of high quality but require more time to produce and so have longer delivery times. Draw a simple customer preference map as in Exhibit 12-1 for Pineway and Ramsey using the attributes of price, delivery time, quality, and design features.arrow_forwardBalanced scorecard. Pineway Electric manufactures electric motors. It competes and plans to grow by selling high-quality motors at a low price and by delivering them to customers in a reasonable time after receiving customers’ orders. There are many other manufacturers who produce similar motors. Pineway believes that continuously improving its manufacturing processes and having satised employees are critical to implementing its strategy in 2017.arrow_forward
- Balanced scorecard. Pineway Electric manufactures electric motors. It competes and plans to grow by selling high-quality motors at a low price and by delivering them to customers in a reasonable time after receiving customers’ orders. There are many other manufacturers who produce similar motors. Pineway believes that continuously improving its manufacturing processes and having satisfied employees are critical to implementing its strategy in 2017. Q.Is Pineway’s 2017 strategy one of product differentiation or cost leadership? Explain briefly.arrow_forwardBalanced scorecard. Pineway Electric manufactures electric motors. It competes and plans to grow by selling high-quality motors at a low price and by delivering them to customers in a reasonable time after receiving customers’ orders. There are many other manufacturers who produce similar motors. Pineway believes that continuously improving its manufacturing processes and having satisfied employees are critical to implementing its strategy in 2017. Q. Draw a strategy map as in Exhibit 12-2 with at least two strategic objectives you would expect to see under each balanced scorecard perspective. Identify what you believe are any (a) strong ties, (b) focal points, (c) trigger points, and (d) distinctive objectives. Comment on the structural analysis of your strategy map.arrow_forwardKey success factors. Dominic Consulting has issued a report recommending changes for its newest manufacturing client, Casper Engines. Casper Engines currently manufactures a single product, which is sold and distributed nationally. The report contains the following suggestions for enhancing business performance: Develop a hybrid engine to stay ahead of competitors Increase training hours of assembly-line personnel to decrease the currently high volumes of scrap and waste. Reduce lead times (time from customer order of product to customer receipt of product) by 20% in order to increase customer retention. Negotiate faster response times with direct material suppliers to allow for lower material inventory levels Benchmark the company’s gross margin percentages against its major competitors. Link each of these changes to the key success factors that are important to managers.arrow_forward
- The jarvis corporation produces bucket loader assemblies for the tractor industry. The product has a long term life expectancy. Jarvis has a traditional manufacturing and inventory system. Jarvis is considering the installation of a just-in-time inventory system to improve its cost structure. In doing a full study using its manufacturing engineering team as well as consulting with industry JIT experts and the main vendors and suppliers of the components Jarvis uses to manufacture the bucket loader assemblies, the following incremental cost-benefit relevant information is available for analysis: The Jarvis cost of investment capital hurdle rate is 15%. One time cost to rearrange the shop floor to create the manufacturing cell workstations is $275,000. One time cost to retrain the existing workforce for the JIT required skills is $60,000. Anticipated defect reduction is 40%. Currently there is a cost of quality defect assessment listed as $150,000 per year. The setup time for…arrow_forwardCost drivers and value chain. Torrance Technology Company (TTC) is developing a new touchscreen smartphone to compete in the cellular phone industry. The company will sell the phones at wholesale prices to cell phone companies, which will in turn sell them in retail stores to the final customer. TTC has undertaken the following activities in its value chain to bring its product to market:A. Perform market research on competing brands Design a prototype of the TTC smartphone Market the new design to cell phone companies Manufacture the TTC smartphone Process orders from cell phone companies Deliver the TTC smartphones to the cell phone companies Provide online assistance to cell phone users for use of the TTC smartphone Make design changes to the smartphone based on customer feedback During the process of product development, production, marketing, distribution, and customer service, TTC has kept track of the following cost drivers: Number of smartphones shipped by TTC Number of…arrow_forwardHurney 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. Hurney believes that continuously improving its manufacturing processes and having satisfied employees are critical to implementing its strategy. Required: Is Hurney'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 a. for the financial perspective. b. for the customer perspective. c. for the internal business process perspective. d. for the learning and growth perspective.arrow_forward
- Zodiac Sound Company manufactures audio systems, both made-to-order and mass-produced systems that are typically sold to large- scale manufacturers of electronics equipment. For competitive reasons, the company is trying to increase its manufacturing cycle efficiency (MCE) measure. As a strategy for improving its MCE performance, the company is considering a switch to JIT manufacturing. While the company managers have a fairly good feel for the costs of implementing JIT, they are unsure about the benefits of such a move, both in financial and nonfinancial terms. To help inform the ultimate decision regarding a move to a JIT system, you've been asked to provide some input. Fortunately, you've recently attended a continuing professional education (CPE) workshop on the costs and benefits of moving to JIT and therefore feel comfortable responding to management's request. Required: 3. Given the estimated data below, calculate the MCE for both the current manufacturing process and the…arrow_forwardZodiac Sound Company manufactures audio systems, both made-to-order and mass-produced systems that are typically sold to large- scale manufacturers of electronics equipment. For competitive reasons, the company is trying to increase its manufacturing cycle efficiency (MCE) measure. As a strategy for improving its MCE performance, the company is considering a switch to JIT manufacturing. While the company managers have a fairly good feel for the costs of implementing JIT, they are unsure about the benefits of such a move, both in financial and nonfinancial terms. To help inform the ultimate decision regarding a move to a JIT system, you've been asked to provide some input. Fortunately, you've recently attended a continuing professional education (CPE) workshop on the costs and benefits of moving to JIT and therefore feel comfortable responding to management's request. Required: 3. Given the estimated data below, calculate the MCE for both the current manufacturing process and the…arrow_forwardBalanced scorecard, social performance. Comtex Company provides cable and Internet services in the greater Boston area. There are many competitors that provide similar services. Comtex believes that the key to financial success is to offer a quality service at the lowest cost. Comtex currently spends a significant amount of hours on installation and post-installation support. This is one area that the company has targeted for cost reduction. Comtex’s balanced scorecard for 2017 follows.arrow_forward
- Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning