Homework Assignment 1 (Tham Sriswat 6610215008)
Compare and contrast the concept of OKRs and BSC
The Objectives and Key Results (OKRs) and the Balanced Scorecard (BSC) are both
strategic management frameworks that aim to align organizational activities with overarching
goals, yet they differ in their focus, flexibility, and time horizon. OKRs emphasize simplicity
and agility, with clear, concise objectives and measurable key results. This framework is
often employed on a shorter-term basis, allowing for adaptability in response to changing
business environments. It is commonly used at individual, team, and organizational levels to
ensure alignment. On the other hand, the Balanced Scorecard (BSC) takes a more holistic
approach by considering four perspectives: financial, customer, internal business processes,
and learning/growth. This framework provides a longer-term perspective, aligning strategic
objectives with an organization's vision and mission. While both frameworks share the goal
of aligning actions with strategy and improving organizational performance, OKRs are more
goal-centric and adaptable, while the Balanced Scorecard offers a comprehensive, long-term
view with a focus on various performance indicators across different perspectives.
E1-26
1. Developing a bonus reward system for the managers of various offices of the AAA
(American Automotive Association) Travel Agency.
Ans: Involves motivating employees, evaluating performance, aligning actions with
organizational goals, controlling costs, managing talent, and incorporating budgeting and
planning considerations. These objectives collectively contribute to the effective management
and success of the organization.
2. Comparing the actual and planned cost of a consulting engagement completed by an
engineering firm such as Allied Engineering.
Ans: Addresses objectives such as performance evaluation, variance analysis, budgeting and
planning, cost control, decision-making support, client billing, and continuous improvement.
These objectives collectively contribute to effective cost management, financial control, and
strategic decision-making within the engineering firm.
3. Determining the cost of manufacturing a tennis racket at Wilson Sporting Goods.
Ans: Addresses objectives such as product costing, cost control, pricing strategy, budgeting,
performance evaluation, decision-making support, continuous improvement, and inventory
valuation. These objectives collectively contribute to effective cost management, financial
control, and strategic decision-making within the manufacturing process.
4. Measuring the cost of inventory of digital cameras on hand in a Best Buy store.
Ans: Involves managerial accounting objectives such as inventory valuation, COGS
calculation, financial reporting, budgeting, performance evaluation, decision-making support,
continuous improvement, and compliance with taxation standards. These objectives
collectively contribute to effective inventory management and financial control within the
retail operation.
5. Estimating the annual operating cost of a newly proposed Wells Fargo branch bank.
Ans: Involves managerial accounting objectives such as budgeting and planning, cost control,
performance evaluation, decision-making support, profitability analysis, benchmarking,
continuous improvement, and compliance and reporting. These objectives collectively
contribute to effective branch management and financial control within the banking
organization.
6. Measuring the following costs incurred during one month in a Hyatt Regency hotel:
(a. Wages of table-service personnel - b. Property taxes)
Ans: Involves managerial accounting objectives such as cost allocation, budgeting and
planning, cost control, performance evaluation, decision-making support, profitability
analysis, continuous improvement, and compliance and reporting. These objectives
collectively contribute to effective cost management and financial control within the hotel
industry.
7.Comparing a Sheraton Hotel’s room rate structure, occupancy rate, and restaurant
patronage with industry averages.
Ans: Involves managerial accounting objectives such as benchmarking, performance
evaluation, profitability analysis, decision-making support, market positioning, continuous
improvement, budgeting and planning, marketing, and competitive analysis. These objectives
collectively contribute to effective management and financial control within the hospitality
industry.
E1-27
Use the Internet to access the website for one of the following companies, or any other
company of your choosing. (Walmart - www.walmart.com)
Required: Find the management discussion and analysis portion of the firm’s most recent
online annual report. Then briefly discuss how managerial accounting can contribute to the
company’s financial goals.
Ans: Managerial accounting at Walmart contributes to the company's financial goals by
providing insights into costs, efficiency, budgeting, performance, and strategic decisionmaking, all of which are essential components of sustaining and enhancing the company's
financial success.
P1-29
Required:
1. Explain how the CFO and managerial accounting could assist Nelson in addressing the
company’s problems.
Ans: The CFO and managerial accounting can serve as valuable partners for Nelson in
addressing the company's problems by providing financial insights, cost management
strategies, performance monitoring, and overall guidance in making informed and strategic
decisions. Their collaborative efforts can contribute to the company's financial stability and
long-term success.
2. Would a cross-functional team be useful here? Briefly discuss.
Ans: In my point of view, a cross-functional team would likely be highly beneficial in
addressing the company's challenges. A cross-functional team consists of individuals from
different functional areas within the organization, bringing diverse skills, expertise, and
perspectives to collaborate on specific projects or issues. In Nelson's case, a cross-functional
team could facilitate a holistic approach to problem-solving.
3. Many resources in the sporting-goods company would present significant capacity issues.
List three such resources and describe their capacity issues in light of the company’s
operations.
Ans: In a sporting-goods company, several resources face significant capacity issues that
impact the overall operational efficiency. Firstly, manufacturing equipment and production
lines may encounter constraints, causing bottlenecks and delays, particularly when demand is
high. This limitation can impede the company's responsiveness to market trends and the
timely introduction of new products. Secondly, warehouse and distribution centers with
insufficient capacity may lead to challenges in inventory management, longer lead times, and
difficulties in meeting customer demand promptly. Lastly, a shortage or inadequate training
of skilled labor can limit the company's ability to innovate, maintain product quality, and
effectively market sporting goods, hampering growth and competitiveness. Addressing these
capacity issues requires strategic investments and initiatives to optimize processes, expand
infrastructure, and enhance workforce capabilities.
4. Evaluate the following statement and provide an example as applied to Nelson’s business:
“Data analytics is the opposite of ‘gut feeling.’”
Ans: In Nelson's business, the statement "Data analytics is the opposite of 'gut feeling'" is
exemplified by the decision-making process. Suppose Nelson, guided by his gut feeling,
believes that increasing advertising spending will lead to enhanced sales. However, upon
leveraging data analytics, he discovers empirical evidence suggesting that the return on
investment (ROI) for the current advertising channels is low, and the customer acquisition
cost is high. This analytical approach provides objective insights into the effectiveness of
different marketing strategies, customer behavior, and the actual impact on sales. It
underscores the contrast between intuitive judgments and data-driven decision-making,
emphasizing the importance of empirical evidence in optimizing strategies and achieving
better business outcomes.
P1-31
Required:
1.Discuss the ethical considerations that Marie Allen should recognize in deciding how to
proceed.
Ans: In deciding how to proceed, Marie Allen must recognize several crucial ethical
considerations to ensure responsible and principled leadership. Transparency and honesty
should guide her decisions, fostering trust with stakeholders such as employees, customers,
and investors. Ethical leaders prioritize the well-being of employees, ensuring fair treatment
and minimizing negative impacts on job security and working conditions. Customer trust is
paramount, requiring Marie to assess potential consequences on product quality, pricing, and
service. Additionally, ethical decision-making involves an awareness of the environmental
impact of business practices, adherence to laws and regulations, and a commitment to social
responsibility. Marie should strive to eliminate conflicts of interest, treat all stakeholders
equitably, and assess the long-term implications of her choices, promoting sustainability and
contributing positively to society. By navigating these ethical considerations, Marie can
foster a culture of integrity and responsibility within the company.
2. Explain what ethical responsibilities should be accepted by (a) the controller, (b) the
quality control engineer, and (c) the plant manager.
Ans: The controller is responsible for ensuring accurate and transparent financial reporting in
compliance with professional standards, including a duty to blow the whistle on unethical
practices if necessary. The quality control engineer must prioritize product quality and safety,
maintaining professional integrity by honestly addressing issues. Collaboration with
management is crucial. The plant manager is tasked with operational integrity, openly
communicating challenges, and considering the company's long-term interests. All roles share
a commitment to ethical decision-making, transparency, and maintaining stakeholder trust.
3. What should Marie Allen do? Explain your answer.
Ans: Marie Allen should assess the challenges her business faces, gather relevant
information, and engage stakeholders for insights. Prioritizing ethical considerations and
aligning decisions with long-term goals, she should develop a strategic plan, seeking expert
advice if need. Transparent communication is crucial for building trust. Continuous
monitoring and adaptability ensure the effectiveness of the plan, and Marie should view the
process as a learning opportunity, striving for continuous improvement in decision-making.
C1-33
Required:
1. Describe Nolan’s ethical responsibilities in this situation.
Ans: In this situation, Andrea Nolan, the accounting manager at Progressive Applications
Corporation, has key ethical responsibilities. She must prioritize transparency and open
communication, ensuring honesty in financial reporting to safeguard the company's interests.
Loyalty to Progressive is paramount, and Nolan needs to manage vendor relationships
responsibly, especially considering the significant business ties with Web Graphic Inc.
Ethical conduct requires a careful balance between transparency and confidentiality,
acknowledging potential consequences. Exploring alternative solutions to financial
challenges and mitigating conflicts of interest, particularly with her relationship with Web
Graphic, are integral aspects of her ethical responsibilities. Ultimately, Nolan must prioritize
the long-term sustainability of Progressive in her decision-making.
2. Independent of your answer to requirement 1, assume that Nolan learns that Borman of
Web Graphic has decided to postpone the special paper order required for Progressive’s
printing job. Nolan believes Borman must have heard rumors about Progressive’s financial
problems from some other source because she has not talked to Borman. Should Nolan tell
the appropriate Progressive officials that Borman has postponed the paper order? Explain
your answer.
Ans: Nolan's decision to inform Progressive officials about Web Graphic's decision should
be based on a careful evaluation of the ethical principles involved, including transparency,
verification of information, the impact on business relationships, and the need for
confidentiality. Open communication is essential, but the approach should aim to address
concerns while minimizing potential negative consequences on the business relationship. If
Nolan decides to disclose the information, it should be done judiciously, considering the
broader implications for both companies.
3. Independent of your answers to the first two requirements, assume that Borman has
decided to postpone the special paper order because he has learned of Progressive’s financial
problems from some source other than Nolan. In addition, Nolan realizes that Jim Grason,
Progressive’s purchasing manager, knows of her friendship with Borman. Now Nolan is
concerned that Grason may suspect she told Borman of Progressive’s financial problems
when Grason finds out Borman has postponed the order. Describe the steps that Nolan should
take to resolve this situation
Ans: In addressing the potential misunderstanding with Jim Grason, Progressive's purchasing
manager, Andrea Nolan should promptly clarify that she did not disclose Progressive's
financial problems to Rob Borman. She needs to emphasize her commitment to professional
integrity, reassure Grason about her dedication to Progressive's best interests, and explain the
external factors contributing to the special paper order postponement. Acknowledging her
friendship with Borman, Nolan should stress that personal connections haven't compromised
her professional responsibilities. Expressing a willingness to cooperate with any investigation
and involving higher management, if necessary, demonstrates her commitment to a fair
resolution. Nolan should view this as a learning opportunity, reflecting on ways to prevent
similar misunderstandings in the future, such as being more cautious about personal
connections in a professional setting.
E2-27
Not all manufacturing processes fall neatly into the structure presented in the chapter. One
variation is called mass customization. Search the term mass customization on the Internet.
Required: Select and read several articles about mass customization. Then briefly explain
1. How mass customization relates to the structure of manufacturing processes discussed in
the chapter
Ans: Mass customization is a manufacturing approach that combines the flexibility of
customization with the efficiency of mass production. It allows companies to produce goods
tailored to individual customer needs at a large scale. In the context of traditional
manufacturing structures, which often emphasize either mass production or customization,
mass customization represents a hybrid model. It integrates elements of to deliver
personalized products efficiently.
2. Whether you believe mass customization would be the best type of manufacturing process
for a gaming computer manufacturer like Falcon Northwest.
Ans: Mass customization could be particularly well-suited for a gaming computer
manufacturer like Falcon Northwest. Gamers often have unique preferences for components,
specifications, and aesthetics. Offering a mass customization approach allows Falcon
Northwest to cater to individual customer demands, providing a competitive edge in a market
where personalization is valued.
3. What effect this choice would have on Falcon Northwest’s costs
Ans: The choice of mass customization for Falcon Northwest would likely result in both
increased costs, particularly in the short term due to necessary investments, and potential
benefits in terms of premium pricing, customer satisfaction, and long-term efficiency gains.
The overall impact on costs would depend on how effectively the company can manage the
complexities associated with individualized production.
E2-28
Consider the following costs that were incurred during the current year:
1. Tire costs incurred by Ford Motor Company:
(a) Product cost
(b) Variable
(c) Direct material
2. Sales commissions paid to the sales force of Dell Inc.:
(a) Period cost
(b) Variable
(c) Not applicable (since it's a period cost)
3. Wood glue consumed in the manufacture of Rooms To Go furniture:
(a) Product cost
(b) Variable (assuming the cost is directly proportional to the amount of furniture
produced)
(c) Direct material
4.Hourly wages of refinery security guards employed by ExxonMobil:
(a) Period cost
(b) Fixed
(c) Not applicable (since it's a period cost)
5. The salary of a financial vice president of Hewlett Packard:
(a) Period cost
(b) Fixed
(c) Not applicable (since it's a period cost)
6.Advertising costs of Coca-Cola:
(a) Period cost
(b) Variable (as it may vary based on promotional activities)
(c) Not applicable (since it's a period cost)
7.Straight-line depreciation on factory machinery of Boeing Corporation:
(a) Product cost
(b) Fixed
(c) Manufacturing overhead
8.Wages of assembly-line personnel of Whirlpool Corporation:
(a) Product cost
(b) Variable
(c) Direct labor
9. Delivery costs incurred by Ben & Jerry’s for a shipment of their ice cream to a grocery
store:
(a) Product cost
(b) Variable
(c) Not applicable (since it's related to delivery, it is considered a part of the cost of
goods sold)
10. Newsprint consumed in printing at The New York Times:
(a) Product cost
(b) Variable
(c) Direct material
11. Plant insurance costs of Texas Instruments:
(a) Product cost
(b) Fixed
(c) Manufacturing overhead
12. LED costs incurred in light-bulb manufacturing of GE Lighting:
(a) Product cost
(b) Variable
(c) Direct material
E2-30
Mighty Muffler, Inc., operates an automobile service facility that specializes in replacing
mufflers on compact cars. The following table shows the costs incurred during a month when
600 mufflers were replaced.
Required: Fill in the missing amounts, labeled (a) through (o), in the table.
Muffler Replacement
500
600
700
Total Cost:
Fixed cost
Variable cost
total Cost
Cost per muffler replacement:
Fixed cost
Variable cost
Total cost per muffler replacement
42,000
25,000
67,000
42,000
30,000
72,000
42,000
35,000
77,000
84
50
134
70
50
120
60
50
110
P2-43
Required:
1. Prepare San Fernando Fashions’ schedule of cost of goods manufactured for the year.
San Fernando Fashion Company
Schedule of Cost of Goods Manufactured
For the Year Ended 12/31/X2
Direct Materials :
Raw Materials, 1/1
Add:Materials Purchase
Material Available for use
Deduct: Raw Materials, 12/31
Direct Labor
Manufacturing Overhead:
Indirect Materials
Indirect Labor
Plant Utilities
Depreciation, plant and equipment
Other
Total Manufacturing Costs
Add: Work-in-process, 1/1
Deduct: Work-in-process, 12/31
Cost of Goods Manufactured
40,000
180,000
220,000
25,000
10,000
15,000
40,000
60,000
80,000
195,000
200,000
205,000
600,000
40,000
30,000
610,000
2. Prepare San Fernando Fashions’ schedule of cost of goods sold for the year.
Finished-goods inventory, 1/1
Add: Cost of goods manufactured
Goods available for sale
Deduct: Finshed-goods for sale
Cost of goods sold
San Fernando Fashion Company
Schedule of Cost of Goods Sold
For the Year Ended 12/31/X2
20,000
610,000
630,000
50,000
580,000
3. Prepare San Fernando Fashions’ income statement for the year.
Sale Revenue
Less: Cost of good sold
Gross Margin
Selling and adminstrative expense
Income before income tax
Less: Income tax expense
Net Income
San Fernando Fashion Company
Income Statement
For the Year Ended 12/31/X2
950,000
580,000
370,000
150,000
220,000
90,000
130,000
4. Build a spreadsheet: Construct an Excel spreadsheet to solve all of the preceding
requirements. Show how both cost schedules and the income statement will change if rawmaterial purchases amounted to $190,000 and indirect labor was $20,000
San Fernando Fashion Company
Schedule of Cost of Goods Manufactured
For the Year Ended 12/31/X2
Direct Materials :
Raw Materials, 1/1
Add:Materials Purchase
Material Available for use
Deduct: Raw Materials, 12/31
Direct Labor
Manufacturing Overhead:
Indirect Materials
Indirect Labor
Plant Utilities
Depreciation, plant and equipment
Other
Total Manufacturing Costs
Add: Work-in-process, 1/1
Deduct: Work-in-process, 12/31
Cost of Goods Manufactured
40,000
190,000
230,000
25,000
10,000
20,000
40,000
60,000
80,000
205,000
200,000
210,000
615,000
40,000
30,000
625,000
Finished-goods inventory, 1/1
Add: Cost of goods manufactured
Goods available for sale
Deduct: Finshed-goods for sale
Cost of goods sold
San Fernando Fashion Company
Schedule of Cost of Goods Sold
For the Year Ended 12/31/X2
20,000
625,000
645,000
50,000
595,000
Sale Revenue
Less: Cost of good sold
Gross Margin
Selling and adminstrative expense
Income before income tax
Less: Income tax expense
Net Income
San Fernando Fashion Company
Income Statement
For the Year Ended 12/31/X2
950,000
595,000
355,000
150,000
205,000
90,000
115,000
P2-56
1. Cost of the automobiles used by the department’s rangers. These cars were purchased by
the state, and they would otherwise have been used by the state police.
Classification: Variable Cost, Sunk Cost.
2. Cost of live-trapping and moving beaver that were creating a nuisance in recreational
lakes.
Classification: Indirect cost of providing a particular service, Out of Pocket Cost
3. The department director’s salary.
Classification: Fixed Cost, Direct Cost.
4. Cost of bringing firefighting teams from out of state to help fight forest fires that are
threatening private property
Classification: Variable Cost, Out of Pocket Cost
5. Cost of the fish purchased from private hatcheries, which are used to stock the state’s
public waters.
Classification: Variable Cost
6. The difference between (a) the cost of purchasing fish from private hatcheries and (b) the
cost of running a state hatchery
Classification: Different Cost
7. Cost of producing literature that describes the department’s role in environmental
protection. This literature is mailed free, upon request, to schools, county governments,
libraries, and private citizens.
Classification: Fixed Cost
8. Cost of sending the department’s hydro engineers to inspect one additional dam for
stability and safety
Classification: Marginal Cost
9. Cost of operating the state’s computer services department, a portion of which is allocated
to the Department of Natural Resources.
Classification: Fixed cost, Variable cost
10. Cost of administrative supplies used in the agency’s head office.
Classification: Variable cost
11. Cost of providing a toll-free number for the state’s residents to report environmental
problems.
Classification: Variable Cost
12. The cost of replacing batteries in sophisticated monitoring equipment used to evaluate the
effects of acid rain on the state’s lakes
Classification: Variable Cost
13. Cost of a ranger’s wages, when the ranger is giving a talk about environmental protection
to elementary school children.
Classification: Fixed Cost
14. Cost of direct mailing to 1 million state residents a brochure explaining the benefits of
voluntarily recycling cans and bottles
Classification: Variable Cost
15. The cost of producing a TV show to be aired on public television. The purpose of the
show is to educate people on how to spot and properly dispose of hazardous waste.
Classification: Variable Cost