Coulson and Company is a large retail business that has a firm-wide balanced scorecard. Recently, management has discussed the need for the balanced scorecard to be more relevant to each individual department of the company. Specifically, management wants to come up with unique scorecards for its Public Relations and Inventory Management departments. For both departments, management recognizes that properly and efficiently training employees is important. For these purposes, management gathers data on the median training hours per employee and new employee performance review ratings. For the Inventory Management Department, management is focused on reducing stockouts (running out of certain inventory items) and keeping accurate inventory counts. For these purposes, the company tracks the number of back orders and discrepancies between the physical and record counts of inventory, respectively. For the Public Relations Department, management is focused on improving the public’s CSR image of the company and attracting new customers. Management measures these objectives using Forbes CSR Rating of Coulson and Company and the number of new customers, respectively.
- a. Identify the term for Coulson and Company’s plan to create unique balanced scorecards for its individual departments.
- b. Draw the unique balanced scorecards of each department. Identify the departments’ common and unique measures, and include all the elements of the balanced scorecard that you can in your drawings, given the information provided.
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Chapter 14 Solutions
Managerial Accounting
- The following strategic objectives have been derived from a strategy that seeks to improve asset utilization by more careful development and use of its human assets and internal processes: a. Increase revenue from new products. b. Increase implementation of employee suggestions. c. Decrease operating expenses. d. Decrease cycle time for the development of new products. e. Decrease rework. f. Increase employee morale. g. Increase customer satisfaction. h. Increase access of key employees to customer and product information. i. Increase customer acquisition. j. Increase return on investment (ROI). k. Increase employee productivity. l. Decrease the collection period for accounts receivable. m. Increase employee skills. The heart of the strategy is developing the companys human resources. Management is convinced that empowering employees will lead to an increase in economic returns. Studies have shown that there is a positive relationship between employee morale and customer satisfaction. Furthermore, the more satisfied customers pay their bills more quickly. It was hypothesized that as employees became more involved and more productive, their morale would improve. Thus, the strategy incorporated key objectives that would lead to an increase in productivity and involvement. Required: 1. Classify the objectives by perspective, and suggest a measure for each objective. 2. Prepare a strategy map that illustrates the likely causal relationships among the strategic objectives.arrow_forwardTwo departments within Cougar Gear Inc. are Production and Sales. Each department has a unique scorecard, as follows: The Production Department scorecard focuses on the learning and growth and internal processes perspectives. The Sales Department scorecard focuses on the learning and growth and customer perspectives. Both scorecards have the learning and growth performance metrics of median training hours per employee and average employee tenure. The Production scorecard has the unique metrics of production time per unit and number of production shutdowns. The Sales scorecard has the unique metrics of percentage of customers who shop again and online customer satisfaction rating. The performance targets for each metric are shown in the tan boxes just under the performance metrics. The actual achieved metrics are shown in the red boxes just below the tan boxes. When evaluating both departments, Cougar Gears management looks at the median training hours per employee and average employee tenure metrics and subsequently decides to give the Sales Department a large bonus while giving the Production Department a minimal bonus. a. Determine and define the type of cognitive bias Cougar Gears management has exhibited in this instance. b. Determine which department would have received the larger bonus had the companys management not been biased in the evaluation. c. Discuss one advantage and one disadvantage of using unique balanced scorecards for different departments or divisions of a company.arrow_forwardClassify each of the following performance measures into the balanced scorecard perspective to which it relates: financial perspective, internal operations perspective, learning and growth perspective, or customer perspective. A. Employee satisfaction surveys B. Units of waste per production process, uniformity of products and inventory control C. Number of energy-efficient bulbs replaced D. Management training course certificates awarded E. Divisional profit F. Number of customer referralsarrow_forward
- From the following list of performance measures, label each one as Financial, Customer, Internal Business Processes, or Learning and Growth: Percentage of on-time deliveries Employee turnover ratio Revenue from new products Number of new customers Percentage of compensation based on team performance Percentage of products returned Operating income Time taken to replace defective productsarrow_forwardConsider the following list of scorecard measures: a. Product profitability b. Ratings from customer surveys c. Number of patents pending d. Strategic job coverage ratio e. Revenue per employee f. Quality costs g. Percentage of market h. Employee turnover percentages i. First-pass yields j. On-time delivery percentage k. Percentage of revenues from new sources l. Economic value added Required: Classify each measure according to the following: perspective, financial or nonfinancial, subjective or objective, and external or internal. When the perspective is process, identify which type of process: innovation, operations, or post-sales service.arrow_forwardCarson Wellington, president of Mallory Plastics, was considering a report sent to him by Emily Sorensen, vice president of operations. The report was a summary of the progress made by an activity-based management system that was implemented three years ago. Significant progress had indeed been realized. At the conclusion of the report, Emily urged Carson to consider the adoption of the Balanced Scorecard as a logical next step in the companys efforts to establish itself as a leader in its industry. Emily clearly was impressed by the Balanced Scorecard and intrigued by the possibility that the change would enhance the overall competitiveness of Mallory. She requested a meeting of the executive committee to explain the similarities and differences between the two approaches. Carson agreed to schedule the meeting but asked Emily to prepare a memo in advance, listing the most important similarities and differences between the two approaches to responsibility accounting. Required: Prepare the memo requested by Carson.arrow_forward
- As manager of department B in MarIeys Manufacturing, based on the costs you identified in the previous exercise for further research, how does this impact the financial performance of your department, and what might be some questions you want to ask or solutions you might propose to Marleys management?arrow_forwardCoral Creations has strategic plans that call for rapid growth, a limited number of units for each design to enhance exclusivity, designs for the perfect fit, on-time delivery to customers, retention of highly trained employees with innovative skills, and excellent inventory control. A. Suggest one performance measure for each dimension of the balanced scorecard for Coral Creations. B. Take one of your measures and discuss the linkage it has to multiple strategies in Corals plan.arrow_forwardAssume you have been hired by Cabelas Sporting Goods. As part of your new role in the accounting department, you have been tasked to set up a responsibility accounting structure for the company. As your first task, your supervisor has asked you to give an example of a cost center, profit center, and an investment center within the Cabelas organization. Your supervisor is a little unsure of the difference between a profit center and investment center and would like you to explain the difference.arrow_forward
- Classify the performance measures below into the most likely balanced scorecard perspective itrelates to. Label your answers using C (customer), P (internal process), I (innovation and growth), or F(financial). Number of days of employee absencesClassify the performance measures below into the most likely balanced scorecard perspective itrelates to. Label your answers using C (customer), P (internal process), I (innovation and growth), or F(financial). Number of days of employee absencesarrow_forwardCanarsie Corporation uses a balanced scorecard to evaluate its digital camera manufacturing operation. Which of the following statements with respect to balanced scorecards is/are correct? A balanced scorecard reports management information regarding organizational performance in achieving goals classified by critical success factors to demonstrate that no single dimension of organizational performance can be relied upon to evaluate success. Performance measures used in a balanced scorecard tend to be divided into financial, customer, internal business process, and learning and growth. In a balanced scorecard, internal business processes are what the company does in its attempts to satisfy customers. I and II only are correct. II and III only are correct. III only is correct. I, II, and III are correctarrow_forwardDescribing the balanced scorecard and identifying key performance indicators for each perspective Consider the following key performance indicators, and classify each indicator according to the balanced scorecard perspective it addresses. Choose from the financial perspective, customer perspective, internal business perspective, and the learning and growth perspective. a. Number of customer complaints b. Number of information system upgrades completed c. Residual income d. New product development time e. Employee turnover rate f. Percentage of products with online help manuals g. Customer retention h. Percentage of compensation based on performance i. Percentage of orders filled each week j. Gross margin growth k. Number of new patents l. Employee satisfaction ratings m. Manufacturing cycle time (average length of production process) n. Earnings growth o. Average machine setup time p. Number of new customers q. Employee promotion rate r. Cash flow from operations s. Customer…arrow_forward
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