Question

In: Accounting

Part of the process for developing a balanced scorecard is to identify one or more measures...

Part of the process for developing a balanced scorecard is to identify one or more measures for each perspective.

Required

Categorise each of the following potential balanced scorecard measures according to the following perspectives:

F     Financial

C    Customer

I     Internal business process

L    Learning and growth

(a)    Percentage of customer orders delivered on time

(b)    Ratio of research and development cost to number of new products developed

(c)    Economic value added (EVA)

(d)    Number of hours of employee training

(e)    Direct labour price variance

(f)     Market share

(g)    Percentage of customer orders delivered without error

(h)    Days in accounts receivables

(i)     Throughput time

(j)     Direct materials efficiency variance

(k)    Asset turnover

(l)     Employee retention rate

(m)   Percentage of bad debts collected

(n)    Customer satisfaction ratings

(o)    Number of degrees and certificates held per employee or department

(p)    Percentage of purchase orders that are error free

Solutions

Expert Solution

We can categorize the potential balanced scorecard measures as follows:-

S.No Process Perspective Rationale
a.) Percentage of customer orders delivered on time I Helps to improve internal business processes more effectively.
b.) Ratio of research and development cost to number of new products developed L Research and development results in learning and growth within and outside company
c.) Economic value added (EVA) F This is a financial measure
d.) Number of hours of employee training L Learning and growth of employees within company
e.) Direct labour price variance F Measure of finance as it helps understand variance in budgets
f.) Market share C Depends on the customer acceptance in the market  
g.) Percentage of customer orders delivered without error I Internal business process as it helps to understand the accuracy with which work is being performed
h.) Days in accounts receivables I Internal business process to understand the number days accounts receivables are due
i.) Throughput time I Helps to understand the time it takes for a product to be manufactured internally
j.)   Direct materials efficiency variance F Measure of finance as it helps understand variance in budgets
k.) Asset turnover F Measure of finance as it helps understand how effectively assets are used
l.) Employee retention rate L It helps to understand the employee satisfaction and any changes if needed.  
m.) Percentage of bad debts collected I Internal business process to understand the general bad debt expenses  
n.) Customer satisfaction ratings C Focus on customer as they are the sole of the organization  
o.) Number of degrees and certificates held per employee or department L Helps to elevate higher qualified people to encourage and adopt to higher positions through multiple trainings.
p.) Percentage of purchase orders that are error free I Internal business process as it helps to ensure quality is being maintained.  

The Legends for the letters used under the perspective tab is as follows:-

F - Financial

C - Customer

I - Internal business process

L - Learning and growth


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