HORNGRENS COST ACCOUNTING W/ACCESS
16th Edition
ISBN: 9781323687604
Author: Datar
Publisher: PEARSON
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Textbook Question
Chapter 12, Problem 12.30E
Strategic analysis of operating income (continuation of 12-29). Refer to Exercise 12-29.
- 1. Calculate the operating income of Compton Associates in 2016 and 2017.
Required
- 2. Calculate the growth, price-recovery, and productivity components that explain the change in operating income from 2016 to 2017.
- 3. Comment on your answer in requirement 2. What do these components indicate?
12-29 Strategy, balanced scorecard, service company. Compton Associates is an architectural firm that has been in practice only a few years. Because it is a relatively new firm, the market for the firm’s services is very competitive. To compete successfully, Compton must deliver quality services at a low cost. Compton presents the following data for 2016 and 2017.
| 2016 | 2017 | |
| 1. Number of jobs billed | 40 | 50 |
| 2. Selling price per job | $32,000 | $30,000 |
| 3. Architect labor-hours | 24,000 | 27,000 |
| 4. Cost per architect labor-hour | $35 | $36 |
| 5. Architect support capacity (number of jobs the firm can do) | 60 | 60 |
| 6. Total cost of software-implementation support | $168,000 | $180,000 |
| 7. Software-implementation support-capacity cost per job (row 6 ÷ row 5) | $2,800 | $3,000 |
Architect labor-hour costs are variable costs. Architect support costs for each year depend on the Architect support capacity that Compton chooses to maintain each year (that is, the number of jobs it can do each year). Architect support costs do not vary with the actual number of jobs done that year.
- 1. Is Compton Associate’s strategy one of product differentiation or cost leadership? Explain briefly.
Required
- 2. Describe key measures you would include in Compton’s balanced scorecard and your reasons for doing so.
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Below is a list of various metrics used to measure performance. For each metric, identify the correct balanced scorecard perspective with which the metric is associated.
Metric
Balanced Scorecard Perspective
Average stock price
Economic value added
Employee turnover rates
Manufacturing cycle time
Market share
Number of days from product launch to shelf
Number of defects
Number of new patent applications
Percentage of repeat customers
Percentage decrease in operating costs
Percentage of sales generated by new products
Research and development spending as a percentage of net revenues
options:
Customer
Financial
Internal Business
Learning and Growth
QUESTION
1. Identify applicable key performance objectives and/or measures for the balanced scorecard of MetroCorporation. Explain briefly how your cited objectives/ measures can affect the financial performanceof the company.
2. Calculate the productivity component that explains the change in operating income from 20X2 and20X3.
Chapter 12 Solutions
HORNGRENS COST ACCOUNTING W/ACCESS
Ch. 12 - Define strategy.Ch. 12 - Describe the five key forces to consider when...Ch. 12 - Prob. 12.3QCh. 12 - What is a customer preference map, and why is it...Ch. 12 - Prob. 12.5QCh. 12 - What are four key perspectives in the balanced...Ch. 12 - What are the five types of conditions to consider...Ch. 12 - Describe three features of a good balanced...Ch. 12 - What are three important pitfalls to avoid when...Ch. 12 - Describe three key components in doing a strategic...
Ch. 12 - Why might an analyst incorporate the...Ch. 12 - How does an engineered cost differ from a...Ch. 12 - What is downsizing?Ch. 12 - What is a partial-productivity measure?Ch. 12 - Prob. 12.15QCh. 12 - Jacobs Inc. is a relatively new company that has...Ch. 12 - The balanced scorecard describes all of the...Ch. 12 - Canarsie Corporation uses a balanced scorecard to...Ch. 12 - Balanced scorecard. Pineway Electric manufactures...Ch. 12 - Analysis of growth, price-recovery, and...Ch. 12 - Strategy, balanced scorecard, merchandising...Ch. 12 - Strategic analysis of operating income...Ch. 12 - Analysis of growth, price-recovery, and...Ch. 12 - Identifying and managing unused capacity...Ch. 12 - Strategy, balanced scorecard. Stanmore Corporation...Ch. 12 - Strategic analysis of operating income...Ch. 12 - Analysis of growth, price-recovery, and...Ch. 12 - Identifying and managing unused capacity...Ch. 12 - Strategy, balanced scorecard, service company....Ch. 12 - Strategic analysis of operating income...Ch. 12 - Analysis of growth, price-recovery, and...Ch. 12 - Identifying and managing unused capacity...Ch. 12 - Balanced scorecard and strategy. Scott Company...Ch. 12 - Strategic analysis of operating income...Ch. 12 - Analysis of growth, price-recovery, and...Ch. 12 - Identifying and managing unused capacity...Ch. 12 - Balanced scorecard. Following is a random-order...Ch. 12 - Balanced scorecard. (R. Kaplan, adapted) Petrocal,...Ch. 12 - Balanced scorecard. Vic Corporation manufactures...Ch. 12 - Balanced scorecard, environmental, and social...Ch. 12 - Balanced scorecard, social performance. Comtex...Ch. 12 - Balanced scorecard, environmental, and social...Ch. 12 - Partial-productivity measurement. Gable Company...Ch. 12 - Total factor productivity (continuation of 12-43)....
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