Balanced Scorecard Case Study
Beastie Boats Ltd is pursuing an aggressive long-term objective of expanding its market share and growing its net income in the medium and long-term. Based on the information provided, you are required to draw a strategy map for Beastie Boats Ltd which aligns with the 4 perspectives of the Balanced Scorecard.
Beastie Boats Ltd produces high quality boats. The company is currently working on 3 specialty orders for 3 different customers.
The orders are numbered, 'Jon112', 'Dave 200' and 'Bill333'.
All jobs were completed and sold for cash.
Jon112 sold for $200,000
Dave200 sold for $200,000
Bill333 sold for $250,000
Direct labor cost $18 per hour.
The accountant has split up costs into 2 overhead cost pools.
Total electricity is considered as one overhead cost pool. Electricity cost was $240,000 this year. It is allocated on the basis of machine hours for each job.
Administrative salaries are a second cost pool. Total salaries for admin cost $180,000 this year. They are allocated on the basis of the number of phone calls made to each customer.
The following deatails were retrieved from the accounting records:
a) Calculate the overhead allocation rate for the two cost pools, Electricity and Admin.
b) Calculate the costs recorded during production for each job.
c) Prepare journal entries to record costs during production.
d) Prepare the journal entry to show the cost of jobs completed.
e) Assume that Beastie Boats Ltd uses a perpetual inventory system. Prepare the journal entry to record the sales. You may aggregate the sales values (i.e. only 2 journal entries are necessary)
Discuss the linkages which you have made in Question 1.
CVP Analysis - Break Even, Target Profit, CVP Graph
Dangles Berries Ltd produces and sells canned fruit. Cost information relating to production for the current year is presented below.
Costs for administration are half fixed and half variable.
All units that are produced are sold in the current year.
IT costs refers to the salary for a part time individual who maintains computers.
The sale price for each unit is $6.
The corporate tax rate is 30%.
|Electricity used in production
|Elelctricity used in office
|Overhead (IT costs)
a) Classify all costs as either fixed or variable. Summarise these costs in the table provided
b) Calculate the number of units required to be produced and sold to break even
c) The manager wants to make an after tax profit of $245,000. How many units must be sold to achieve this?
d) Prepare a CVP Graph showing the relationship between total revenues and total costs. Utilise as much space as needed.
Based on your understanding of Balanced Scorecard and with reference to academic and industry publications, discuss the relevance of modern tools like Balanced Scorecard in the contemporary business world.