Actual Target Performance Performance Objectives Financial Perspective Measures Operating-income changes from productivity improvements Operating-income changes from growth Increase shareholder value $2,000,000 $1,200,000 $2,500,000 $1,100,000 Customer Perspective Market share in color laser printers Increase market share 4% 3.6% Internal-Business-Process Perspective Improve manufacturing quality Reduce delivery time to customers Learning-and-Growth Perspective Develop process skills 88% 90% Yield 23 days 20 days Order-delivery time Percentage of employees trained in process and quality management 92% 93% Enhance information-system capabilities Percentage of manufacturing processes with real-time feedback 90% 92% 1. Was Vic successful in implementing its strategy in 2017? Explain. 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 perspec- tive 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? Required

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter12: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 12.4E

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Question

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.

Actual
Target
Performance Performance
Objectives
Financial Perspective
Measures
Operating-income changes from
productivity improvements
Operating-income changes from
growth
Increase shareholder value
$2,000,000
$1,200,000
$2,500,000
$1,100,000
Customer Perspective
Market share in color laser printers
Increase market share
4%
3.6%
Internal-Business-Process Perspective
Improve manufacturing quality
Reduce delivery time to customers
Learning-and-Growth Perspective
Develop process skills
88%
90%
Yield
23 days
20 days
Order-delivery time
Percentage of employees trained in
process and quality
management
92%
93%
Enhance information-system
capabilities
Percentage of manufacturing
processes with real-time
feedback
90%
92%
1. Was Vic successful in implementing its strategy in 2017? Explain.
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 perspec-
tive 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?
Required

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