Question

uppot capacity Problems 2-30 Balanced scorecard and Compamy The company sells the player to discount store xpensive than similar products sold by Scott's competitors, but the Maxus offers just DVo playbs compared with DVD and Blu-ray playback offered by competitor Nomad Manufacturing Furthermore, the Maxus has experienced production problems that have resulted in significant rework costs strategy. Scott Company manufactures a DVD player caled the Ma Myl the country This playar is significantly less has an excellent reputation for quality 1. Draw a simple customer preference map for Scott and Nomad using the attributes of prica Nomad's model and playback features. Use the format of Exhibit 12-1 s Scott's current strategy that of product differentiation or cost leadership Scott would like to improve quality and decrease costs by improving processe to reduce rework. Scott's managers believe the increased quality will increase sa map as in Exhibit 12-2 describing the cause-and-effect relationships among th training workers les. Draw a strategy e strategic objectives u would expect to see in Scott's balanced scorecard each strategic objective, suggest a measure you would recommend in Scott's balanced scorecar 12-31 Strategic analvsis of operating income (continuation of 12-30). Refer to Problem 12-30. As a result of the actions taken, quality has significantly improved in 2013 While rework and unit costs of the Maxus have decreased. Scott has reduced manufacturing capacity because capacity is no longer needed to support rework. Scott has also lowered the Maxus's selling price to gain market share and unit sales have increased. Information about the current period (2013) and last period (2012) follows. 2012 2013 1. Units of Maxus produced and sold 2. Selling price 3. Direct materials used (kits*) 4. Direct material cost per kit* 5. Manufacturing capacity in kits processed 6. Total conversion costs 7. Conversion cost per unit of capacity (row 6 8. Selling and customer-service capacity 9. Total selling and customer-service costs 8,000 $95 10,000 $32 14,000 $280,000 $20 90 customers 11,000 $30 11,000 $32 13,000 $260,000 $20 90 customers 16,200 180 row 5) Tow B) $135n $150 10. Selling and customer-service capacity cost per customer (row 9 + row 8) " A kit is composed of all the major components needed to produce a DVD player Conversion costs in each year depend on production capacity defined in terms of kits that can be processed, not the actual kits started. Selling and customer-service costs depend on the number of customers that Scott can support, not the actual number of customers it serves. Scott has 70 customers in 2012 and 80 customers in 2013 1. Calculate operating income of Scott Company for 2012 and 2013. 2 Calculate the growth, price-recovery, and productivity components that explain the change in operat- ing income from 2012 to 2013 Comment on your answer in requirement 2. What do these components indicate? 3.

i want to solve number 12-31

Answer 1

Ques 1 ting income for each year is as 880,000 Revenue ($95 8,000: $80 11,000 Costs Direct materials costs I$32 10,000: $32 Conversion costs Selling & customer service costs 760,000 320,000 280,000 352,000 260,000 16200 528,200 Total costs $146,500 251,800 Change in operating income 105,300F Ques 2 The growth component Revenue effect of growth (11000-80001 S95 (Actual units of output sold in 2013- Actual unnits of ouput sold in 2012)*selling 285000 Favourable Cost effect of growth for variable costs (nits of input required to produce 2013 output in 2012 actual units of inputs used to produce 2012 output) Input prive in 2013 Cost effect of growth for fixed costs Actual units capacity in 2012 because adequate capacity exists to produce 2013 output in 2012 Actual units of capacity in 2012] Price per unit of capacity in 2012 Direct materials that would be required in 2013 to produce 11,000 units instead of the 8,000 units produced in 2012, assuming the 2012 input-output relationship continued into 2013, equal 13,750 kits(10000/800011000) That is, the number of kits to produce 11,000 units is 10,000 kits8,000 units1.25 kits per unit 11,000 units 13,750 kits. Conversion costs and selling and customer-service capacity will not change because adequate capacity exists in 2012 to support year 2013 output and customers. The cost effects of ent are 532 Direct materias costs Conversion costs Selling & customer-service costs Cost effect of $120,000 U 14,000-14,0 90-90 150 120,000O U In summary, the net increase in operatin Revenue effect of growth Cost effect of growwth 285,000 F 120,000U $165,0CO F in rating income due to The Price recovery component Revenue effect of price recovry (seling price in2013-Selling price in 2012) Actual units of output sold in 2013 -(80-951 11000- Cost effect of price recovery variable costs-(input price in 2013 Input price in 2012)units of input required to produce 2013 output in 2012 Cost effect recovery of fixed costs-(price per unit of capacity in 2013 - Price unit of capacity in 2012)Actual units of capacity in 2012 because 1650C0 Unfavourable adequate capacity exists to produce 2013 output in 2012 32 $32 520 520) $0 Direct materials costs Conversion costs 13,750 12,000 SO customer-service cost 180 $150 2,700 U $2,700U Cost effect of price-recove In summary,the net increase in Revenue effect of price-recove Cost effect of price-recove Change in operating income due to price-recove $167,70U rat $165,000 U 2,700 U cost effect of productivity for variable costs = (actual units of input used to produce 2013 output-units of input required to produce 2013 output in 2012)*input price in 2013 cost effect productivity for fixed costs Actual units of capacity in 2013 Actual units of capacity in 2012 because adequate capacity exsits tp produce 2013 output in 2012) Price per unit of capacity in 2013 The Direct materials costs t of cost cha 11,000 13,750) 13,000-14,000) 90 -90 $88,000F 20,000 F Selling & customer-service costs Change in o $180 income due to producti $108,000

Revenue and Revenue a Cost Effect of Producti Income Income Statement Cost Effects Cost Effects of Component Statement Amounts of Growth Price-Recovery in 2013 Amounts in 2012 Component Component in 2013 in 2013 in 2013 Revenues Costs $285,000 F $165,000 U 2,700 U $880,000 628,200 251,800 613,500 120,000 U 165,000 108,000 F Ques 3 The analysis of operating income indicates that a significant amount of the increase in operating income resulted from Scott's cost leadership strategy. The company was able to improve quality and grow sales. The price recovery component indicates that Scott reduced prices to be competitive in the market, but Scott also improved direct material productivity and reduced conversion cost capacity as rework decreased. Lower prices and higher quality boosted sales.