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Consider the following key performance indicators, and classify each according to the balanced scorecard perspective it addresses. Choose from financial perspective, customer perspective, internal business perspective, or learning and growth perspective.

a. Number of employee suggestions implemented

b. Revenue growth

c. Number of on-time deliveries

d. Percentage of sales force with access to real-time inventory levels

e. Customer satisfaction ratings

f. Number of defects found during manufacturing

g. Number of warranty claims

h. Return on investment

i. Variable cost per unit

j. Percentage of market share

k. Number of hours of employee training

l. Number of new products developed

m. Yield rate (number of units produced per hour)

n. Average repair time

o. Employee satisfaction

p. Number of repeat customers

Short Answer

Expert verified

A

Learning and Growth

B

Financial Perspective

C

Internal Business

D

Internal Business

E

Customer

F

Internal Business

G

Internal Business

H

Financial Perspective

I

Financial Perspective

J

Financial Perspective

K

Learning and Growth

L

Internal Business Perspective

M

Internal Business Perspective

N

Internal Business Perspective

O

Learning and growth

P

Customer

Step by step solution

01

Part a Number of employee suggestions implemented

The number of employee suggestions implemented comes under the learning and growth perspective. Learning and growth perspective of balanced includes all the activities which tell about the capabilities of the employee, information system, and the company’s climate for action.

02

Part b Revenue growth

The revenue growth will be classified from a financial perspective. This is so because the growth in the revenue will provide the information about the finances of the company to the investors and the creditors.

03

Part c Number of on-time deliveries Internal Business

The number of on-time deliveries will come under the internal business. This is because the internal business perspective includes the operations of the business. Lean and effective internal operations allow the company to meet customers’ needs and expectations and remain competitive.

04

Part d Percentage of the sales force with access to real-time inventory levels Internal Business

The percentages of the sales force with access to real-time inventory levels will also be classified under the internal business perspective. It is an important factor of the internal business perspective.

05

Part e Customer satisfaction ratings

Customer satisfaction ratings come under the customer perspective balanced scorecard. The evaluation of the customer satisfaction rating is critical to achieving the financial goals of the company outlined in the financial perspective of the balanced scorecard.

06

Part f Number of defects found during the manufacturing Internal Business

The number of defects found during the manufacturing will come from an internal business perspective. It will come to the operations of the business which is a very important factor in the internal business perspective.

07

Part g Number of warranty claims

The warranty claims come under the category of Internal business perspective. This is because the warranty claims are the post-sales services by the company to their customers .

08

Part h Return on investment

The return on investment will be considered from the financial perspective as return on investment means how much income investment is generating, which is very useful information for the investors.

09

Part i Variable cost per unit Financial

The variable cost per unit will come under the financial perspective as the variable cost per unit is computed to get the information on the cost incurred by the company on producing the goods.

10

Part j Percentage of market share

The percentage of market share will be classified into the financial perspective of the balanced scorecard. This will tell the investors and creditors of the company about the performance of the company in the marketplace.

11

Part k Number of hours of employee training

The number of hours of employee training will come under the learning and growth perspective. Learning and growth will show information about the capabilities of the employee.

12

Part l Number of new products developed Internal Business

The number of new products will come from an internal business perspective. There are factors that are there in an internal business perspective and one of them is innovations which means making new products.

13

Part m Yield rate (number of units produced per hour)

The number of units produced per hour will also come from an internal business perspective as it comes under the operations of the company.

14

Part n Average repair time Internal Business

The average repair time will also come the internal business as it will come under the post-sales service provided by the company to customers.

15

Part o Employee satisfaction

Employee satisfaction will come under the learning and growth perspective as it is related to the employees of the business.

16

Part p Number of repeat customers

The number of repeat customers will be classified from the customer perspective as this perspective tells us about how the customer sees the company. If the company has a good image then the customer will come back to the company again.

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Most popular questions from this chapter

The Harris Company is decentralized, and divisions are considered investment centers. Harris has one division that manufactures oak dining room chairs with upholstered seat cushions. The Chair Division cuts, assembles, and finishes the oak chairs and then purchases and attaches the seat cushions. The Chair Division currently purchases the cushions for \(22 from an outside vendor. The Cushion Division manufactures upholstered seat cushions that are sold to customers outside the company. The Chair Division currently sells 800 chairs per quarter, and the Cushion Division is operating at capacity, which is 800 cushions per quarter. The two divisions report the following information:

Chair Division Cushion Division

Sales Price per Chair \) 85 Sales Price per Cushion \( 32

Variable Cost (other than cushion) 42 Variable Cost per Cushion 13

Variable Cost (cushion) 22

Contribution Margin per Chair \) 21 Contribution Margin per Cushion $ 19

Requirements

1. Determine the total contribution margin for Harris Company for the quarter.

2. Assume the Chair Division purchases the 800 cushions needed from the Cushion Division at its current sales price. What is the total contribution margin for each division and the company?

3. Assume the Chair Division purchases the 800 cushions needed from the Cushion Division at its current variable cost. What is the total contribution margin for each division and the company?

4. Review your answers for Requirements 1, 2, and 3. What is the best option for Harris Company?

5. Assume the Cushion Division has capacity of 1,600 cushions per quarter and can continue to supply its outside customers with 800 cushions per quarter and also supply the Chair Division with 800 cushions per quarter. What transfer price should Harris Company set? Explain your reasoning. Using the transfer price you determined, calculate the total contribution margin for the quarter.

Using ROI and RI to evaluate investment centers

Consider the following condensed financial statements of Pure Life, Inc. The company’s target rate of return is 30%.

PURE LIFE, INC. Income Statement For the Year Ended December 31, 2018 Net Sales Revenue Cost of Goods Sold Gross Profit Operating Expenses 2,300,000 2,000,000 300,000 (34,000) 266,000 3,700,000 \( 6,000,000 Operating Income Interest Expense Other Income and (Expenses): Income Before Income Tax Expense Income Tax Expense Net Income 93,100 \) 172,900

PURE LIFE, INC. Comparative Balance Sheet As of December 31, 2018 and 2017 Assets 2018 2017 Cash Accounts Receivable Supplies Property, Plant, and Equipment, net Patents, net Total Assets Accounts Payable Short-term Notes Payable Long-term Notes Payable Common Stock, no Par Retained Earnings Total Liabilities and Stockholders’ Equity Liabilities and Stockholders’ Equity \( 62,000 200 204,000 101,000 \) 394,000 26,800 \( 76,000 600 305,000 163,000 \) 606,000 61,400 52,000 \( 31,000 126,500 169,000 15,500 \) 394,000 148,000 \( 29,000 196,000 205,500 27,500 \) 606,000

Requirements

1. Calculate the company’s ROI. Round all of your answers to four decimal places.

2. Calculate the company’s profit margin ratio. Interpret your results.

3. Calculate the company’s asset turnover ratio. Interpret your results.

4. Use the expanded ROI formula to confirm your results from Requirement 1. Interpret your results.

5. Calculate the company’s RI. Interpret your results.

Explain the difference between a centralized company and a decentralized company.

One subunit of Harris Sports Company had the following financial results last month:

Harris—Subunit X Actual Results Flexible Budget Flexible Budget Variance (F or U) % Variance (F or U)

Direct Materials \( 28,000 \) 25,900

Direct Labor 13,000 13,800

Indirect Labor 26,400 23,100

Utilities 12,300 11,300

Depreciation 25,000 25,000

Repairs and Maintenance 4,600 5,600

Total \( 109,300 \) 104,700

Requirements

1. Complete the performance evaluation report for this subunit. Enter the variance percent as a percentage of the budgeted amount rounded to two decimal places.

2. Based on the data presented, what type of responsibility center is this subunit?

3. Which items should be investigated if part of management’s decision criteria is to investigate all variances exceeding $2,500 or 10%?

4. Should only unfavorable variances be investigated? Explain.

List the disadvantages of decentralization.

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