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13- 22

Strategy, balanced scorecard. Stanmore Corporation makes a special- purpose machine, D4H, used in the textile industry. Stanmore has designed the D4H machine for 2011 to be distinct from its competitors. It has been generally regarded as a superior machine. Stanmore presents the following data for 2010 and 2011.


2010                2011

1. Units of D4H produced and sold                        200                210

2. Selling price                                                 $ 40,000         $ 42,000

3. Direct materials ( kilograms)                                 300,000        310,000

4. Direct material cost per kilogram                         $ 8                $ 8.50

5. Manufacturing capacity in units of D4H                250                250

6. Total conversion costs                                $ 2,000,000        $ 2,025,000

7. Conversion cost per unit of capacity ( row 6 ÷ row 5)         $ 8,000                 $ 8,100

8. Selling and customer- service capacity                 100 customers         95 customers

9. Total selling and customer- service costs                 $ 1,000,000        $ 940,500

10. Selling and customer- service capacity

cost per customer ( row 9 ÷ row 8)                         $ 10,000         $ 9,900


Stanmore produces no defective machines, but it wants to reduce direct materials usage per D4H machine in 2011. Conversion costs in each year depend on production capacity defined in terms of D4H units that can be produced, not the actual units produced. Selling and customer- service costs depend on the number of customers that Stanmore can support, not the actual number of customers it serves. Stanmore has 75 customers in 2010 and 80 customers in 2011.


1. Describe briefly key measures that you would include in Stanmores balanced scorecard and the reasons for doing so.


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