Chapter 12
Strategic Performance Measurement
Solutions to Questions
12-1 The four categories are learning and income) don’t occur. Without this feedback, an
growth, internal business process, customer, and organization may drift on indefinitely with an
financial. ineffective strategy based on faulty
assumptions.
12-2 The four types of quality costs are
prevention costs, appraisal costs, internal failure 12-7 The balanced scorecard is constructed
costs, and external failure costs. The best way to support the company’s strategy, which is a
to lower cost of quality is to make additional theory about what actions will further the
investments in prevention and appraisal that are company’s goals. Assuming that the company
more than offset by reductions in internal and has financial goals, measures of financial
external failure costs. Ultimately, the best performance must be included in the balanced
approach for reducing the cost of quality is to scorecard as a check on the reality of the theory.
prevent defects from occurring rather than If the internal business processes improve, but
detecting them after they have occurred. the financial outcomes do not improve, the
theory may be flawed and the strategy should
12-3 The difference between delivery cycle be changed.
time and throughput time is the waiting period
between when an order is received and when 12-8 A balanced scorecard defines the
production on the order is started. Throughput measures that a company must improve to
time is made up of process time, inspection achieve its strategic goals. However, employees
time, move time, and queue time. Process time tend to focus on improving the measures that
is value-added time and inspection time, move increase their rewards. To align employee
time, and queue time are non-value-added time. efforts with strategic goals, a company should
motivate employees to improve balanced
12-4 An MCE of less than 1 means that the scorecard measures by rewarding them for
production process includes non-value-added doing so.
time. An MCE of 0.40, for example, means that
40% of throughput time consists of actual 12-9 Companies measure corporate social
processing, and that the other 60% consists of responsibility performance because, in addition
moving, inspection, and other non-value-added to serving stockholders, they also have a
activities. responsibility to serve other stakeholders—such
as customers, employees, suppliers,
12-5 A company’s balanced scorecard should communities, and environmental and human
be derived from and support its strategy. rights advocates—whose interests are tied to
Because different companies have different the company’s performance.
strategies, their balanced scorecards should be
different. 12-10 The Global Reporting Initiative (GRI) is
a leading organization in the field of social and
12-6 The if-then hypothesis statements environmental performance measurement. It
included in a balanced scorecard enable a has created a widely adopted sustainability
company to continually test the theories reporting framework that includes three
underlying its strategy. If a strategy is not universal standards and three sets of topic-
working, it should become evident when some specific standards related to economic,
of the predicted effects (i.e., higher residual environmental, and social performance.
,Copyright © 2024 McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw Hill LLC.
Managerial Accounting 18th Edition, Solutions Manual, Chapter 12
,Chapter 12: Applying Excel
The completed worksheet is shown below.
Copyright © 2024 McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw Hill LLC.
Managerial Accounting 18th Edition, Solutions Manual, Chapter 12 149
, Chapter 12: Applying Excel (continued)
The completed worksheet, with formulas displayed, is shown below.
Copyright © 2024 McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw Hill LLC.
Managerial Accounting 18th Edition, Solutions Manual, Chapter 12
Strategic Performance Measurement
Solutions to Questions
12-1 The four categories are learning and income) don’t occur. Without this feedback, an
growth, internal business process, customer, and organization may drift on indefinitely with an
financial. ineffective strategy based on faulty
assumptions.
12-2 The four types of quality costs are
prevention costs, appraisal costs, internal failure 12-7 The balanced scorecard is constructed
costs, and external failure costs. The best way to support the company’s strategy, which is a
to lower cost of quality is to make additional theory about what actions will further the
investments in prevention and appraisal that are company’s goals. Assuming that the company
more than offset by reductions in internal and has financial goals, measures of financial
external failure costs. Ultimately, the best performance must be included in the balanced
approach for reducing the cost of quality is to scorecard as a check on the reality of the theory.
prevent defects from occurring rather than If the internal business processes improve, but
detecting them after they have occurred. the financial outcomes do not improve, the
theory may be flawed and the strategy should
12-3 The difference between delivery cycle be changed.
time and throughput time is the waiting period
between when an order is received and when 12-8 A balanced scorecard defines the
production on the order is started. Throughput measures that a company must improve to
time is made up of process time, inspection achieve its strategic goals. However, employees
time, move time, and queue time. Process time tend to focus on improving the measures that
is value-added time and inspection time, move increase their rewards. To align employee
time, and queue time are non-value-added time. efforts with strategic goals, a company should
motivate employees to improve balanced
12-4 An MCE of less than 1 means that the scorecard measures by rewarding them for
production process includes non-value-added doing so.
time. An MCE of 0.40, for example, means that
40% of throughput time consists of actual 12-9 Companies measure corporate social
processing, and that the other 60% consists of responsibility performance because, in addition
moving, inspection, and other non-value-added to serving stockholders, they also have a
activities. responsibility to serve other stakeholders—such
as customers, employees, suppliers,
12-5 A company’s balanced scorecard should communities, and environmental and human
be derived from and support its strategy. rights advocates—whose interests are tied to
Because different companies have different the company’s performance.
strategies, their balanced scorecards should be
different. 12-10 The Global Reporting Initiative (GRI) is
a leading organization in the field of social and
12-6 The if-then hypothesis statements environmental performance measurement. It
included in a balanced scorecard enable a has created a widely adopted sustainability
company to continually test the theories reporting framework that includes three
underlying its strategy. If a strategy is not universal standards and three sets of topic-
working, it should become evident when some specific standards related to economic,
of the predicted effects (i.e., higher residual environmental, and social performance.
,Copyright © 2024 McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw Hill LLC.
Managerial Accounting 18th Edition, Solutions Manual, Chapter 12
,Chapter 12: Applying Excel
The completed worksheet is shown below.
Copyright © 2024 McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw Hill LLC.
Managerial Accounting 18th Edition, Solutions Manual, Chapter 12 149
, Chapter 12: Applying Excel (continued)
The completed worksheet, with formulas displayed, is shown below.
Copyright © 2024 McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw Hill LLC.
Managerial Accounting 18th Edition, Solutions Manual, Chapter 12
