Haglund Department Store is located in the downtown area of a small city. While the store had
been profitable for many years, it is facing increasing competition from large national chains that
have set up stores on the outskirts of the city. Recently the downtown area has been undergoing
revitalization, and the owners of Haglund Department Store are somewhat optimistic that profit-
ability can be restored.
In an attempt to accelerate the return to profitability, management of Haglund Department
Store is in the process of designing a balanced scorecard for the company. Management believes
the company should focus on two key problems. First, customers are taking longer and longer to
pay the bills they incur using the department store's charge card, and the company has far more
bad debts than are normal for the industry. If this problem were solved, the company would have
more cash to make much needed renovations. Investigation has revealed that much of the problem
with late payments and unpaid bills results from customers disputing incorrect charges on their
bills. These incorrect charges usually occur because salesclerks incorrectly enter data on the charge
account slip. Second, the company has been incurring large losses on unsold seasonal apparel.
Such items are ordinarily resold at a loss to discount stores that specialize in such distress items.
The meeting in which the balanced scorecard approach was discussed was disorganized and
ineffectively led-possibly because no one other than one of the vice presidents had read anything
about how to build a balanced scorecard. Nevertheless, a number of potential performance mea-
sures were suggested by various managers. These potential performance measures are:
a. Percentage of charge account bills containing errors.
b. Percentage of salesclerks trained to correctly enter data on charge account slips.
Average age of accounts receivables.
C.
d. Profit per employee.
e. Customer satisfaction with accuracy of charge account bills from monthly customer survey.
f. Total sales revenue.
g. Sales per employee.
h. Travel expenses for buyers for trips to fashion shows.
i. Unsold inventory at the end of the season as a percentage of total cost of sales.
j. Courtesy shown by junior staff members to senior staff members based on surveys of senior
staff./nn.
Quality of food in the staff cafeteria based on staff surveys.
o. Percentage of employees who have attended the city's cultural diversity workshop.
p. Total profit.
Required:
1. As someone with more knowledge of the balanced scorecard than almost anyone else in the
company, you have been asked to build an integrated balanced scorecard. In your scorecard,
use only performance measures listed previously. You do not have to use all of the perfor-
mance measures suggested by the managers, but you should build a balanced scorecard that
reveals a strategy for dealing with the problems with accounts receivable and with unsold
merchandise. Construct the balanced scorecard following the format used in Exhibit 11-5. Do
not be concerned with whether a specific performance measure falls within the learning and
growth, internal business process, customer, or financial perspective. However, use arrows
to show the causal links between performance measures within your balanced scorecard and
explain whether the performance measures should show increases or decreases.
Fig: 1
Fig: 2
A hospital is considering to purchase a diagnostic machine costing P800 000. The projected life of the machine is 8 years and has an expected salvage value of P60 000 at the end of 8 years. The annual operating cost of the machine is 75 000. It is expected to generate revenues of P 400 000 per year for eight years. Presently, the hospital is outsourcing the diagnostic work and earning commission income of P120 000 per annum; net of taxes. a. Advise the hospital management whether it would be profitable to purchase the machine, basing your recommendation under: i.Net Present Value Method ii. Profitability Index Method b. What are the relative merits and demerits of the following investment appraisal techniques and what conclusions would you therefore draw about their relative attractiveness? i.Payback period; and ii.Accounting Rate of Return.
CASE 11-23 Balanced Scorecard LO11-4 Haglund Department Store is located in the downtown area of a small city. While the store had been profitable for many years, it is facing increasing competition from large national chains that have set up stores on the outskirts of the city. Recently the downtown area has been undergoing revitalization, and the owners of Haglund Department Store are somewhat optimistic that profit- ability can be restored. In an attempt to accelerate the return to profitability, management of Haglund Department Store is in the process of designing a balanced scorecard for the company. Management believes the company should focus on two key problems. First, customers are taking longer and longer to pay the bills they incur using the department store's charge card, and the company has far more bad debts than are normal for the industry. If this problem were solved, the company would have more cash to make much needed renovations. Investigation has revealed that much of the problem with late payments and unpaid bills results from customers disputing incorrect charges on their bills. These incorrect charges usually occur because salesclerks incorrectly enter data on the charge account slip. Second, the company has been incurring large losses on unsold seasonal apparel. Such items are ordinarily resold at a loss to discount stores that specialize in such distress items. The meeting in which the balanced scorecard approach was discussed was disorganized and ineffectively led-possibly because no one other than one of the vice presidents had read anything about how to build a balanced scorecard. Nevertheless, a number of potential performance mea- sures were suggested by various managers. These potential performance measures are: a. Percentage of charge account bills containing errors. b. Percentage of salesclerks trained to correctly enter data on charge account slips. Average age of accounts receivables. C. d. Profit per employee. e. Customer satisfaction with accuracy of charge account bills from monthly customer survey. f. Total sales revenue. g. Sales per employee. h. Travel expenses for buyers for trips to fashion shows. i. Unsold inventory at the end of the season as a percentage of total cost of sales. j. Courtesy shown by junior staff members to senior staff members based on surveys of senior staff./nn. Quality of food in the staff cafeteria based on staff surveys. o. Percentage of employees who have attended the city's cultural diversity workshop. p. Total profit. Required: 1. As someone with more knowledge of the balanced scorecard than almost anyone else in the company, you have been asked to build an integrated balanced scorecard. In your scorecard, use only performance measures listed previously. You do not have to use all of the perfor- mance measures suggested by the managers, but you should build a balanced scorecard that reveals a strategy for dealing with the problems with accounts receivable and with unsold merchandise. Construct the balanced scorecard following the format used in Exhibit 11-5. Do not be concerned with whether a specific performance measure falls within the learning and growth, internal business process, customer, or financial perspective. However, use arrows to show the causal links between performance measures within your balanced scorecard and explain whether the performance measures should show increases or decreases.
4- (15 pts.) A midsize corporation is considering purchase of Cyber Li- ability Insurance Policy. The following table provides the probability distribution of yearly cost coverage associated with different level of Cyber Security IT network interruptions for this corporation.
5- (15 pts.) XPRO Manufacturing is considering the introduction of a family of new products. John Avalon, the VP of Operations considering three different production processes (batch manufacturing, custom manufacturing, and group technology. The demand and profit depends on the state of economy as provided in table below.
a. The table below gives information extracted from the annual financial statements of Management plc for the past year. Calculate the length of the operating cycle (assuming 365 days in the year). b. Highlight four problems with the use of financial ratios as a measure of performance measurement for an organisation.(8 marks)
Required: 1. Prepare journal entries to record the above transactions. 2. Set up T-accounts for Materials inventory, Work in process, Finished goods, Overhead control and Cost of goods sold. Post all entries necessary to these accounts. 3. Determine the Cost of Goods Manufactured. 4. Indicate whether overhead is over or under applied during the period, and by how much. What do we do to deal with, or dispose of, this amount? 5. Prepare the Statements of Cost of Goods Manufactured and Cost of Goods Sold for the period. (Note: When preparing the Cost of Goods Manufacturing Statement, use ONE amount for overhead - you need NOT list all of the individual overhead items.) 6. Show the Inventory section of the Balance Sheet for Montclair as of the end of January. 7. What factors could have caused overhead to be overapplied or underapplied for the period? (Hint: there are really ONLY 2)
Required: 1. Using the above performance measures, construct a balanced scorecard strategy map for the Powder 8 Lodge. Use the chart attached as a guide. Use arrows to show causal links and indicate with a + or - whether the performance measure should increase or decrease.
1. (20 pts.) A manufacturing firm is planning to open a new factory. There are four countries under consideration: USA, Canada, Mexico, and Panama. The table below lists the fixed costs and variable costs for each site. The product is mainly sold in the U.S. for $795 per unit.
a. On 4 January 2020 Thabo deposited P7 800 into savings account. The simple interest rate agreed upon was 6.2% per annum. What will be accumulated amount in the savings account on 21 November 2020? (Assume a year has 365 days). b. Joanna has taken an endowment policy that matures in 30 years. The expected interest rate per year is 11.15%. Her annual payment (at the end of each year) isP8000. Calculate: i.The present value of the policy(4 ii.The future value of the policy c. Find the value of $10,000 in 10 years. The investment earns 8% for four years and then earns 4% for the remaining six years.(4 marks) d. P1 400 was left in an investment account for 20 years and it earned 12.5% per-year compounded half-yearly. Calculate the value of the investment after 20 years.
a. You are thinking about investing your money in the stock market. You have thefollowing two stocks in mind: stock A and stock B. You know that the economycan either go in recession or it will boom. Being an optimistic investor, youbelieve the likelihood of observing an economic boom is two times as high asobserving an economic depression. You also know the following about your twostocks: i. Calculate the expected return for stock A and stock B. ii. Calculate the total risk (variance and standard deviation) for stock A and for stock b. A portfolio consists of the following assets with associated betas: