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 satisfy- ing 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 prod- ucts. 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 cur- rent products. Vic's balanced scorecard (initiatives omitted) for the just-completed fiscal year 2017 follows. Actual Performance Performance Target Objectives Financial Perspective Measures Operating-income changes from productivity improvements Increase shareholder value $2,000,000 $1,200,000 Operating-income changes from growth $2,500,000 $1,100,000 Customer Perspective Increase market share Market share in color laser printers 4% 3.6% Internal-Business-Process Perspective Improve manufacturing quality Yield 88% 90% 23 days 20 days Reduce delivery time to customers Order-delivery time Learning-and-Growth Perspective Develop process skills 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%

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 satisfy- ing 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 prod- ucts. 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 cur- rent products. Vic's balanced scorecard (initiatives omitted) for the just-completed fiscal year 2017 follows. Actual Performance Performance Target Objectives Financial Perspective Measures Operating-income changes from productivity improvements Increase shareholder value $2,000,000 $1,200,000 Operating-income changes from growth $2,500,000 $1,100,000 Customer Perspective Increase market share Market share in color laser printers 4% 3.6% Internal-Business-Process Perspective Improve manufacturing quality Yield 88% 90% 23 days 20 days Reduce delivery time to customers Order-delivery time Learning-and-Growth Perspective Develop process skills 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%

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter11: Strategic Cost Management

Section: Chapter Questions

Problem 4CE: Kagle design engineers are in the process of developing a new green product, one that will...

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