# Refer to Exercise 13.13. Suppose that Mandy communicates the following weights to her CEO: Perspective: Financial, 40%; Customer, 20%; Process, 20%; Learning &amp; growth, 20% Financial objectives: Profits, 50%; Revenues, 25%; Costs, 25% Customer objectives: Customer satisfaction, 60%; Market share, 40% Process objectives: Defects decrease, 40%; Supplier selection, 30%; Redesign process, 30% Learning &amp; growth objective: Training, 100% Mandy next sets up a bonus pool of 100,000 and indicates that the weighting scheme just described will be used to determine the amount of potential bonus for each perspective and each objective. Required: 1. Calculate the potential bonus for each perspective and objective. 2. Describe how Mandy might award actual bonuses so that her managers will be encouraged to implement the Balanced Scorecard. 3. What are some other ways that Mandy can encourage alignment with the company’s strategic objectives (other than incentive compensation)? BuyFindarrow_forward ### Cornerstones of Cost Management (C... 4th Edition Don R. Hansen + 1 other Publisher: Cengage Learning ISBN: 9781305970663 #### Solutions Chapter Section BuyFindarrow_forward ### Cornerstones of Cost Management (C... 4th Edition Don R. Hansen + 1 other Publisher: Cengage Learning ISBN: 9781305970663 Chapter 13, Problem 14E Textbook Problem 112 views ## Refer to Exercise 13.13. Suppose that Mandy communicates the following weights to her CEO:Perspective: Financial, 40%; Customer, 20%; Process, 20%; Learning & growth, 20%Financial objectives: Profits, 50%; Revenues, 25%; Costs, 25%Customer objectives: Customer satisfaction, 60%; Market share, 40%Process objectives: Defects decrease, 40%; Supplier selection, 30%; Redesign process, 30%Learning & growth objective: Training, 100%Mandy next sets up a bonus pool of100,000 and indicates that the weighting scheme just described will be used to determine the amount of potential bonus for each perspective and each objective.Required: 1. Calculate the potential bonus for each perspective and objective. 2. Describe how Mandy might award actual bonuses so that her managers will be encouraged to implement the Balanced Scorecard. 3. What are some other ways that Mandy can encourage alignment with the company’s strategic objectives (other than incentive compensation)?

1.

To determine

Calculate the potential bonus for each perspective and objective.

### Explanation of Solution

Strategic alignment: Creating and implementing strategy are two important factors for the success of balance scorecard. The balance scorecard is designed to induce “organizational change” and for this change to get implemented employees should be completely informed about the strategy, employees should share ownership of measures, targets, objectives and initiatives.

Calculate the potential bonus for each perspective:

 Perspective Percentage of allocation Bonus pool Potential bonus Financial 40% $100,000$40,000 Customer 20% $100,000$20,000 Process 20% $100,000$20,000 Learning and growth 20% $100,000$20,000

Table (1)

Calculate the potential bonus for each perspective

 Financial Objectives Percentage of allocation (a) Potential bonus of perspective (b) Potential bonus for objective (a × b) Profits 50% $40,000$20,000 Revenues 25% $20,000$10,000 Costs 25% $20,000$10,000

Table (2)

 Customer Objectives Percentage of allocation

2.

To determine

Describe the manner in which Person M might award actual bonuses.

3.

To determine

Explain the manner in which revenue growth strategy can be tested, discuss the role of lead and lag measure, targets and double-loop feedback.

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