Fundamentals of Cost Accounting 3rd Edition by William N. Lanen, Shannon W. Anderson, Michael Maher

Exercise 37

Performance Measures, Drawing a Business Model

Garnet Electronics discloses to you that it uses a balanced scorecard with the following performance measures:

?Profit

?Training hours

?Percentage of defects

?Employee turnover

?Customer satisfaction

?Patents awarded

Required

a. Link the measures to the perspectives of the balanced scorecard by filling in the following table:

Perspective	Performance Measure	Linked to Perspective Number?
1. Financial	Profit	________________
2. Customer	Training hours	________________
3. Learning and growth	Percentage defects	________________
4. Internal business processes	Employee turnover	________________
	Customer satisfaction	________________
	Patents awarded	________________

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b. Present a business model as in Exhibit 18.1 that would lead the company to choose this set of measures.

Step 1 of 5

Business strategy

It is an approach used by a company for deploying its resources, assets and capabilities to provide maximum returns to its investors and meeting customer expectations. It is component of high-level strategy plan and defines value preposition.

Balance scorecard

This is a performance comprising of multiple perspectives like financial gains, customer satisfaction, performance of internal business processes and learning and growth of employees. It is tool used by management that helps to track responsibility towards different stakeholders. This scorecard indicates the success of a company to meet their objectives towards stakeholders i.e. investors, customers, employees and suppliers.

Business model

It is framework that establishes link between various employees and levels within the company in such a way that their job accomplishments result in meeting organizational goals and objectives. Roles and responsibilities of all employees are inter related and they work towards common objective to reduce cost and maximize profitability.