Question #1
a)
List and describefour potential problems with a “traditional”
overhead allocation system.
b)
List and describe four “red flags”
that may indicate you should consider revising your overhead allocation system.
Question #2
a)
Describe the differences between unit-related, batch-related, and
product-sustaining activities. Give one example of each type of activity.
b)
Describe the difference between transaction drivers and duration drivers. When
would one type be preferred over the other?
Question #3
Assume
the CFO of your organization approaches you to ask your advice about
implementing the Balanced Scorecard at your organization.
a) List and describe the four
perspectives of the Balanced Scorecard.
b)
What steps would you encourage him or her to take in order to successfully
implement and use the Scorecard?
Question #4
The
ABC Company manufactures widgets. It competes and plans to grow by selling
high-quality widgets at low prices and by delivering them to customers quickly.
There are many other companies in the industry producing similar widgets. ABC
believes it needs to continuously improve its manufacturing and delivery
processes and that having satisfied employees are both critical to its
long-term success.
a)
Based on this information, what type of strategy to you believe ABC is
pursuing? Be sure to back up your claim
with specific evidence.
b)
List and justify eight metrics (2 in
each of the Balanced Scorecard perspectives) that you believe ABC should
include in its Balanced Scorecard.
c)
ABC calculates the following figures:
|
2011 operating income
|
$1,850,000
|
|
2012 operating income
|
$2,013,000
|
|
Growth component
|
$85,000
|
|
Price-recovery component
|
($72,000)
|
|
Productivity component
|
$150,000
|
In
addition, the market for widgets did not grow in 2012, input process did not
change in 2012, and ABC reduced its selling price in 2012.
Based
on this information, do you believe ABC’s increase in operating income in 2012
is consistent with the strategy you identified in part a? Be sure to justify your answer with specific information.