SERIAL PROBLEM — SP 24
Serial Problem, Business Solutions (20 minutes)
1. The balanced scorecard is a system of performance measures that
requires managers to think of their company from four perspectives:
2. Below are some examples of balanced scorecard measures that
Santana could use. Other examples are possible:
Customer: Percentage of computer workstations returned, number of
Process: Number of defective workstations produced, materials and
Learning: Number of training workshops attended, number of
Financial: Departmental contribution to overhead, return on
Reporting in Action — BTN 24-1
1. Apple revenues by product line
($ in millions)
September
28, 2013
September
29, 2012
September
24, 2011
Total revenues………………………………………$170,910 $156,508 $108,249
Accessories (13%)………………………………..
* Revenue rounded up so product line total revenues sum to total revenues.
2. Apple can divide up the operating expenses into product line direct and
indirect expenses. Some of the direct expenses of a particular product
3. Solution depends on the particular annual report information obtained.
Comparative Analysis — BTN 24-2
($ in millions)
1. Profit margin = Net income/Sales
2. Investment turnover = Investment center sales
Investment center average assets
3. Apple’s profit margin (21.7%) is nearly identical to Google’s (21.6%).
Therefore, for every dollar of sales, the two competitors yield roughly
Ethics Challenge — BTN 24-3
1. There is an ethical concern in this situation. Pincus is taking actions
he would not otherwise take. He believes that “minor compromises” in
his behavior do not significantly affect clients. However, the problem is
2. Given that Pincus is aware of his behavior, its potential consequences,
and the source of what’s behind his behavior (in this case the focus by
management on meeting the quarterly responsibility performance
Alternatively, he could stop his lower level and quality of service and
3. Super Security (the employer) is ultimately responsible for any action
taken by its employees, including Pincus. Management must establish
an ethical code of conduct to ensure that department managers do not
Communicating in Practice — BTN 24-4
Sample solution
MEMORANDUM
TO: Name, Store Manager
FROM: Your Name, National Office Manager
SUBJECT: New Performance Reporting
DATE: Current Date
All current and future periods’ performance reports for all managers
include an allocation of home office expenses. These expenses will be
assigned as a percent of store sales.
The home office provides several services to all its stores. These include
assistance with marketing, product selection, distribution, and volume
discounts. These services can help make the local store more profitable
than a store would be without these services.
There are significant expenses associated with the home office services to
its stores. These expenses are not recovered by the home office except
through the revenues generated by the stores that it assists. This
motivates the inclusion of home office expenses in the performance report
of store managers for all current and future periods.
Taking It to the Net — BTN 24-5
Instructor note: The objective of this assignment is for students to be exposed to the
different accounting and business applications with spreadsheets.
1. The tutorials identified and read by the students will vary. For example,
2. Student responses regarding the usefulness of spreadsheets will
Teamwork in Action — BTN 24-6
Instructor note: Student answers will vary. The key is to look for clear organizational
structure and sound thinking in designing performance reports.
1. The student must make decisions about geographic area, type of
For example, product line managers can report to a central manager for
2. Having comparable responsibility accounting reports is necessary to
For example, if one department’s report separates costs in terms of
Entrepreneurial Decision — BTN 24-7
1. Departmental income statements can be prepared for each department
once expenses have been allocated to it. The expenses will include both
2. If the indirect expenses are a large portion of total expenses, a
departmental income statement might not be the best measure of each
department’s performance. While the department’s income or loss is
3. United By Blue could use ratings from customer satisfaction surveys,
the number of repeat customers, the percentage of orders returned, and
Hitting the Road — BTN 24-8
1. [Student answers will vary for part (1).] One suggested responsibility
accounting reporting framework is to have (1) concessions and (2) categories of movies such
as comedies, dramas, and so forth. The movie departments would report to one manager in
charge of all movies. This “movies” manager along with the concessions manager would report
to top management.
2. One suggested proposal is
Expense Allocation Basis
Heat………………………….Square footage occupied
Global Decision — BTN 24-9
1. Net sales percentage growth [non-percents in millions₩]
Segment Net sales % change from 2012 to 2013
IT and mobile
2. Percentage growth in net sales is higher in the IT and mobile
3. The IT and mobile communications segment earned more operating
4. Samsung’s management can use this information to help establish
long-term goals and strategies and for resource allocation decisions.
An important factor in the valuation of any company is its ability to