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FINANCIAL
PERSPECTIVE
CUSTOMER
PERSPECTIVE
INTERNAL-
BUSINESS-
PROCESS
PERSPECTIVE
LEARNING-
AND GROWTH-
PERSPECTIVE
Increase
operating
income from
productivity
and quality
Grow
revenues
Improve
manufacturing
processes
Develop
process skill
Increase
market share
Grow
operating
income
Increase
customer
satisfaction
Increase
customers
Improve
quality
Align
employee and
organization
goals
Empower
workers
Improve
manufacturing
feedback
Customer-satisfaction ratings
Internal-Business-
Process Perspective
Percentage of defective products sold
Number of major improvements in manufacturing process
Learning-and-Growth
Perspective
Employee-satisfaction ratings
Percentage of employees trained in quality management
Percentage of line workers empowered to manage processes
Percentage of manufacturing processes with real-time feedback
12-31 (25–30 min.) Strategic analysis of operating income (continuation of 12-30).
Refer to Problem 12-30. As a result of the actions taken, quality has significantly improved in 2013
while rework and unit costs of the Maxus have decreased. Scott has reduced manufacturing
capacity because capacity is no longer needed to support rework. Scott has also lowered the
Maxus’s selling price to gain market share and unit sales have increased. Information about the
current period (2013) and last period (2012) follows.
* A kit is composed of all the major components needed to produce a DVD player.
Conversion costs in each year depend on production capacity defined in terms of kits that can be
processed, not the actual kits started. Selling and customer-service costs depend on the number of
customers that Scott can support, not the actual number of customers it serves. Scott has 70
customers in 2012 and 80 customers in 2013.
Required:
1. Calculate operating income of Scott Company for 2012 and 2013.
2. Calculate the growth, price-recovery, and productivity components that explain the change in
operating income from 2012 to 2013.
3. Comment on your answer in requirement 2. What do these components indicate?
