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How is the use of a balanced scorecard as a performance evaluation system helpful to companies?

Short Answer

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Answer

The balanced scorecard represents a major shift in corporate performance measurement.

Step by step solution

01

Meaning of Balanced scorecard

Companies use a balanced scorecard as a vital arranging system to arrange their activities, merchandise, and administrations, communicate around their destinations, and plan their ordinary operations.

02

Use of a balanced scorecard as a performance evaluation system helpful to companies

A critical change in how businesses survey the balanced risks to their execution. Companies get it that budgetary markers are fair one of a few execution pointers, as restricted to employing them as the as it were the benchmark. Observing working and standard budgetary measurements gives supervisors an "adjusted" viewpoint of the business.

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Most popular questions from this chapter

What is goal congruence?

What is a key performance indicator?

One subunit of Racer Sports Company had the following financial results last month:

Subunit X Actual Results Flexible Budget Flexible Budget % Variance

Variance (F or U) (F or U)

Net Sales

Revenue \( 476,000 \) 451,000

Variable

Expenses 261,000 251,000

Contribution

Margin 215,000 200,000

Traceable

Fixed Expenses 40,000 26,000

Divisional

Segment Margin \( 175,000 \) 174,000

Requirements

1. Complete the performance evaluation report for this subunit (round to two decimal places).

2. Based on the data presented and your knowledge of the company, what type of responsibility center is this subunit?

3. Which items should be investigated if part of managementโ€™s decision criteria is to investigate all variances equal to or exceeding \(8,000 andexceeding 10% (both criteria must be met)?

4. Should only unfavorable variances be investigated? Explain.

5. Is it possible that the variances are due to a higher-than-expected sales volume? Explain.

6. Will management place equal weight on each of the variances exceeding \)8,000? Explain.

7. Which balanced scorecard perspective is being addressed through this performance report? In your opinion, is this performance report a lead or a lag indicator? Explain.

8. List one key performance indicator for the three other balanced scorecard perspectives. Make sure to indicate which perspective is being addressed by the indicators you list.

How is the use of a balanced scorecard as a performance evaluation system helpful to companies?

Consider the following data, and determine which of the corporate divisions is more profitable. Explain your reasoning.

Domestic International

Operating income \( 10,000,000 \) 11,000,000

Average total assets 24,000,000 32,000,000

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