Bannister Company, an electronics firm, buys circuit boards and manually inserts various electronic devices into the printed circuit board. Bannister sells its products to original equipment manufacturers. Profits for the last two years have been less than expected. Mandy Confer, owner of Bannister, was convinced that her firm needed to adopt a revenue growth and cost reduction strategy to increase overall profits. After a careful review of her firm's condition, Mandy realized that the main obstacle for increasing revenues and reducing costs was the high defect rate of her products (a 6 percent reject rate). She was certain that revenues would grow if the defect rate was reduced dramatically. Costs would also decline as there would be fewer rejects and less rework. By decreasing the defect rate, customer satisfaction would increase, causing, in turn, an increase in market share. Mandy also felt that the following actions were needed to help ensure the success of the revenue growth and cost reduction strategy: Improve the soldering capabilities by sending employees to an outside course. Redesign the insertion process to eliminate some of the common mistakes. Improve the procurement process by selecting suppliers that provide higher-quality circuit boards. Suppose that Mandy communicates the following weights to her CEO: Perspective: Financial, 43%; Customer, 17%; Process, 18%; Learning & growth, 22% Financial objectives: Profits, 48%; Revenues, 29%; Costs, 23% Customer objectives: Customer satisfaction, 51%; Market share, 49% Process objectives: Defects decrease, 41%; Supplier selection, 26%; Redesign process, 33% Learning & growth objective: Training, 100% Mandy next sets up a bonus pool of $130,000 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. Financial $fill in the blank 1 Customer $fill in the blank 2 Process $fill in the blank 3 Learning & growth $fill in the blank 4 Calculate the potential bonus for each objective. Financial Profits $fill in the blank 5 Revenues $fill in the blank 6 Costs $fill in the blank 7 Customer Customer satisfaction $fill in the blank 8 Market share $fill in the blank 9 Process Defects decrease $fill in the blank 10 Supplier selection $fill in the blank 11 Redesign process $fill in the blank 12 Learning & growth Training $fill in the blank 13

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

Balanced Scorecard, Strategic Alignment

Bannister Company, an electronics firm, buys circuit boards and manually inserts various electronic devices into the printed circuit board. Bannister sells its products to original equipment manufacturers. Profits for the last two years have been less than expected. Mandy Confer, owner of Bannister, was convinced that her firm needed to adopt a revenue growth and cost reduction strategy to increase overall profits.

After a careful review of her firm's condition, Mandy realized that the main obstacle for increasing revenues and reducing costs was the high defect rate of her products (a 6 percent reject rate). She was certain that revenues would grow if the defect rate was reduced dramatically. Costs would also decline as there would be fewer rejects and less rework. By decreasing the defect rate, customer satisfaction would increase, causing, in turn, an increase in market share. Mandy also felt that the following actions were needed to help ensure the success of the revenue growth and cost reduction strategy:

  1. Improve the soldering capabilities by sending employees to an outside course.
  2. Redesign the insertion process to eliminate some of the common mistakes.
  3. Improve the procurement process by selecting suppliers that provide higher-quality circuit boards.

Suppose that Mandy communicates the following weights to her CEO:

Perspective: Financial, 43%; Customer, 17%; Process, 18%; Learning & growth, 22%

Financial objectives: Profits, 48%; Revenues, 29%; Costs, 23%

Customer objectives: Customer satisfaction, 51%; Market share, 49%

Process objectives: Defects decrease, 41%; Supplier selection, 26%; Redesign process, 33%

Learning & growth objective: Training, 100%

Mandy next sets up a bonus pool of $130,000 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.

Financial $fill in the blank 1
Customer $fill in the blank 2
Process $fill in the blank 3
Learning & growth $fill in the blank 4

Calculate the potential bonus for each objective.

Financial
Profits $fill in the blank 5
Revenues $fill in the blank 6
Costs $fill in the blank 7
Customer
Customer satisfaction $fill in the blank 8
Market share $fill in the blank 9
Process
Defects decrease $fill in the blank 10
Supplier selection $fill in the blank 11
Redesign process $fill in the blank 12
Learning & growth
Training $fill in the blank 13
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps with 1 images

Blurred answer
Knowledge Booster
Divisional performance management
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education