Required:

Read the above case about Bright Inc. carefully, provide a report to meet the requirements of
the management as described below in the Project Guide section.

Project Guide

In your report, you must meet the following requirements:

Requirement 1: (7 marks) CLO 4

About the corporate cost;

a. Allocate the $20,000,000 million corporate headquarters cost of Bright Inc. to the
three subsidiaries in USA, Australia and New Zealand using:
1. number of employees in each operating company as the allocation base.
2. net income of each operating company as the allocation base.
b. Write a report to the management of Bright Inc. to explain about the advantages and
disadvantages of allocating corporate headquarters costs using (1) employees and (2)
net income as allocation bases.

Requirement 2: (15 marks). CLO 1

For Robotec;

a. Calculate the number of units need to make and sell each year to earn an after-tax
profit of $250,000.
b. Calculate number of units need to make and sell each year to earn an after-tax profit
of $250,000 if royalty is paid to supplier Alpha.
c. Calculate number of units need to make and sell each year to earn an after-tax profit
of $250,000 if royalty is paid to supplier Beta.
d. Recommend which is better, to engage supplier Alpha or supplier Beta.

Requirement 3: (10 marks). CLO 3

Help Sarah McMahon, the Quality Manager of Bright (USA) Inc., to:

a. Calculate the total cost of quality last year and this year.
b. Calculate the cost in each of the four categories as a percent of the total cost of
quality, for last year.

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 c. Calculate the cost in each of the four categories as a percent of the total cost of
quality, for this year.
d. Assess the company's efforts to manage its costs of quality over the two-year period
which will include suggesting whether or not the performance is trending in a
favorable or unfavorable direction by providing the relevant explanation.

Requirement 4: (20 marks). CLO 2

Assist Kent Duncan, the Product Development Manager at Bright (USA) Inc. on the
following:

a. Assuming the car wash will be open 52 weeks a year, show Kent the expected annual
net cash receipts (gross cash receipts less cash disbursements) from its operation. (Do
not include the cost of the equipment, the working capital, or the salvage value in
these computations.)
b. Show Kent the net present value of the investment in the car wash.
c. Advise him whether or not to open the car wash. Round all dollar figures to the
nearest whole dollar.

Requirement 5: (8 marks). CLO 4

Regarding Opera Food & Beverage Company in Sydney, address the issue of fixed
administrative expenses of $18,800,000 by;

a. Showing the allocation of the fixed administrative expenses among the three
restaurants for this year using sales dollars as an allocation base.
b. Calculating the change in each restaurant's allocated cost from last year to this year.
c. Commenting on the usefulness of sales dollars as an allocation base.
d. Explaining the possible reasons why the manager of Malabar Garden is unhappy with
the amount charged to Malabar Garden Restaurant this year.

Requirement 6: (20 marks). CLO 4

About NZ Dairy Ltd;

a. Prepare a financial statement assuming Tetote and Koretote are sold and not
processed further. Calculate the profit per batch of each intermediate product that
includes the allocated batch cost.

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 b. Prepare a financial statement assuming Tetote and Koretote are sold after further
processed as Hauora and Reka respectively. Calculate the profit per batch of each
Hauora and Reka that includes the allocated batch cost.
c. Decide whether or not Tetote and Koretote should be processed further into Hauora
and Reka. Justify your answer with supporting calculations.

Requirement 7: (20 marks). CLO 5

Facilitate the CEO of Bright Inc.:

a. Place the measures listed in Table 4 in the correct perspectives of the Balanced
Scorecard.
b. Write a report to explain the advantages and disadvantages of a Balanced Scorecard.

Pre-requisite for this project:

Students must understand the concepts discussed in the relevant exercises in class.

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Answers
Requirement 1.

(a) 1. Number of Emplyees as Base

The allocation of corporate costs was based on the number of employees in each operating
company. The total number of employees in the three subsidiaries are as follows:

 USA: 1,480employees
 Australia: 910employees
 New Zealand: 410employees

To allocate the $20,000,000M corporate cost, we used the following formula:

Allocation to each operating company = (Number of employees in the operating company /

Total number of employees in all operating companies) * Total corporate cost

Using the above formula, we calculated the allocated corporate cost for each subsidiary as
follows:

 USA: (1,480/ 2,800) * 20,000,000 = $10,571,428.6M

 Australia: (910/ 2,800) * 20,000,000 = $6,500,000M
 New Zealand: (410/ 2,800) * 20,000,000 = $2,928,571.43M

Results:

The results obtained from the allocation process show that the USA subsidiary has been
allocated the highest corporate cost of $10,571,428.6M, followed by Australia with an
allocation of $6,500,000M and New Zealand with an allocation of $2,928,571.43M.
Conclusion:

The allocation of corporate cost based on the number of employees in each operating
company provides a fair and transparent method for allocating costs. The allocation process
ensures that the subsidiaries with more employees, and therefore potentially more corporate
overheads, are allocated a proportionately higher share of corporate costs. The allocation of
corporate costs for Bright Inc.'s subsidiaries in the USA, Austria, and New Zealand has been
successfully achieved using this method.

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(a)2. Net Income of each Operating group

The net income of each operating company for the year 2022 is as follows:

 Bright Inc. USA: ($240,000,000)

 Bright Inc. Austria: $180,000,000
 Bright Inc. New Zealand: $300,000,000

The total net income of all three subsidiaries is $240,000,000.

To allocate the corporate cost of $20,000,000, we will use the net income of each operating
company as the allocation base. The percentage of the corporate cost that each operating
company will bear is calculated as follows:

 Bright Inc. USA: (-240) / 240) x 20,000,000 = $ 20,000,000M

 Bright Inc. Australia: (180/ 240) x 20,000,000 = $15,000,000M
 Bright Inc. New Zealand: (300 / 240) x 20,000,000 = $25,000,000M

Therefore, the allocation of corporate costs across the three subsidiaries based on net income
is as follows:

 Bright Inc. USA: $10,000,000

 Bright Inc. Austria: $6,666,667
 Bright Inc. New Zealand: $3,333,333

(b). Report to the Management of Bright Inc.

In this report, we will discuss the advantages and disadvantages of allocating corporate
headquarters costs using employees and net income as allocation bases for the three
subsidiaries of Bright Inc. - Bright (USA) Inc., Opera Food & Beverage Company, and NZ
Dairy.

Allocating Corporate Headquarters Costs using Employees as Allocation Base:

Advantages:

 This method is simple and easy to implement.

 It only requires the number of employees in each subsidiary to be determined and
used as the allocation base for corporate headquarters costs.

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  The allocation based on employees is fair, as each subsidiary benefits from the same
level of corporate support and services, regardless of their profitability. Hence, it
aligns with the principle of cost-sharing.

Disadvantages:

 The number of employees is not a precise measure of the benefit received from
corporate headquarters. For instance, a subsidiary with fewer employees may require
more support from the corporate headquarters due to its complex business nature or
regulatory environment.
 Allocating corporate headquarters costs based on employees may lead to cross-
subsidization, where profitable subsidiaries would end up subsidizing less profitable
ones, leading to inefficiencies in resource allocation.

Allocating Corporate Headquarters Costs using Net Income as Allocation Base:

Advantages:

 Allocating corporate headquarters costs based on net income aligns with the principle
of cost causality, as the amount of support required from the corporate headquarters is
directly proportional to the subsidiary's profitability.
 This method incentivizes subsidiaries to improve their profitability and reduce the
burden of corporate support.

Disadvantages:

 This method is more complex and requires accurate reporting of each subsidiary's net
income. This may be difficult to implement, especially in subsidiaries operating in
different countries with different accounting regulations and tax rules.
 Allocating corporate headquarters costs based on net income may lead to unfairness,
as it penalizes less profitable subsidiaries that may require more support from the
corporate headquarters.

In conclusion, both methods have their advantages and disadvantages, and the choice of
allocation base depends on the company's strategic objectives, the nature of its subsidiaries,
and its organizational culture. Based on the given information, I would recommend using the
employee-based allocation method as it aligns with the cost-sharing principle and is easier to
implement.

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Thank you for considering my recommendations.

Sincerely,

[XYZ]

Requirement 2:

(a). Number of units need to make and sell each year to earn an after-tax profit of
$250,000

To calculate the number of units that need to be sold to earn an after-tax profit of $250,000,
we need to first calculate the contribution margin per unit, which is the selling price minus
the variable cost.

Contribution Margin per unit = Selling price - Variable cost = $8.50 - $0.20 = $8.30

Next, we need to calculate the total contribution margin, which is the contribution margin per
unit multiplied by the number of units sold. Let's call the number of units sold X.

Total contribution margin = X * Contribution margin per unit

We can express the total contribution margin as follows: Total contribution margin =
Revenue - Total variable costs = X * Selling price - X * Variable cost = X * ($8.50 - $0.20) =
$8.30X

Now, we can use the following formula to calculate the breakeven point, which is the number
of units that need to be sold to cover the fixed costs: Breakeven point (in units) = Fixed
costs / Contribution margin per unit

Breakeven point = $850,000 / $8.30 = 102,410 units

To earn an after-tax profit of $250,000, we need to generate a total profit of $250,000 / (1 -

0.30) = $357,143 before taxes.

Total profit before taxes = Total contribution margin - Fixed costs

$357,143 = $8.30X - $850,000

Solving for X, we get:

X = ($357,143 + $850,000) / $8.30 = 146,506 units

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Therefore, to earn an after-tax profit of $250,000, Bright (USA) Inc. needs to make and sell
146,506 units of Robotec.

(b). Option 1: To pay royalty to supplier Alpha of 10%.

In this option, the contribution margin per unit will be reduced by the royalty amount, which
is 10% of the selling price. The new contribution margin per unit will be:

Contribution margin per unit = Selling price - Variable cost - Royalty = $8.50 - $0.20 -
($8.50 * 0.10) = $7.65

Using the same formula as before, we can calculate the new breakeven point and the number
of units needed to earn an after-tax profit of $250,000:

Breakeven point = $850,000 / $7.65 = 111,111 units

Total profit before taxes = Total contribution margin - Fixed costs $357,143 = $7.65X -
$850,000 X = ($357,143 + $850,000) / $7.65 = 175,497 units

Therefore, to earn an after-tax profit of $250,000 and pay a royalty of 10%, Bright (USA)
Inc. needs to make and sell 175,497 units of Robotec.

(c). Option 2: To pay royalty of 6.5% to supplier Beta

In this option, the variable cost per unit will increase to $0.25. The new contribution margin
per unit will be:

Contribution margin per unit = Selling price - Variable cost - Royalty = $8.50 - $0.25 -
($8.50 * 0.065) = $7.44

Breakeven point = $850,000 / $7.44 = 114,247 units

Total profit before taxes = Total contribution margin - Fixed costs $357,143 = $7.44X -
$850,000 X = ($357,143 + $850,000) / $7.44 = 183,018 units

Therefore, to earn an after-tax profit of $250,000 and pay a royalty of 6.5% and a variable
cost of $0.25 per unit, Bright (USA) Inc. needs to make and sell 183,018 units of Robotec.

(d)

Based solely on the breakeven point and the number of units needed to earn a profit after
taxes, it seems that the option to engage supplier Alpha with a 10% royalty is the best choice
for Bright (USA) Inc. With a breakeven point of 111,111 units and a total of 175,497 units

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needed to earn an after-tax profit of $250,000, this option requires the company to produce
fewer units than the other option with supplier Beta, and therefore may be less risky and
potentially more profitable.

Requirement 3:

(a). Total Cost of Quality for Last Year

As we know that, the formula for Total Cost of Quality is;

TCoQ = CoGQ + CoPQ

Where in CoGQ = Prevention Costs + Appraisal Costs

So CoGQ for last year = $ 462,100 + $ 537,200 = $ 999,300

Similarly we also that CoPQ = Internal FailureCosts + External Failure Costs

So putting the data given, CoPQ = $823,560 + $ 1,118,000 = $ 1,941,560

Now Adding CoGQ and CoPQ = $ 999,300 + $ 1,941,560 = 2,940,860

So last year Total cost of quality = $ 2,940,86

For this year TCoQ = CoGQ + CoPQ

= ( PC +AC) + ( IFC + EFC)

= ($730,500 + $612,400) + ($557,600 + $792,300)

= $1,342,900 +. 1,349,900

= $2,692,800

(b). Cost of Each Category as % of Total Cost of Quality for Last Year

LAST Year

PC as % of TCoQ = $462,100/$2,940,860*100

= 15.271%

IFC as % of TCoQ = $823,560/$2,940,860*100

= 28 %

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AC as % of TCoQ = $537,200/$2,940,860*100

= 18.26%

EFC as % of TCoQ= $1,118,000/#2,940,860*100

= 38%

(c).

This Year

 Prevention costs: (730,500 / 2,692,800) x 100% = 27.13%

 Appraisal costs: (612,400 / 2,692,800) x 100% = 22.76%
 Internal failure costs: (557,600 / 2,692,800) x 100% = 20.72%
 External failure costs: (792,300 / 2,692,800) x 100% = 29.39%

(d).

Based on the data provided, the company's efforts to manage its costs of quality over the two-
year period seem to be trending in a favorable direction.

Looking at the total cost of quality, there has been a decrease from $2,941,860 in the previous
year to $2,692,800 in the current year. This indicates that the company has been successful in
reducing its costs of quality.

In terms of the individual cost categories, there has been a decrease in internal and external
failure costs. This suggests that the company has been able to identify and address issues
before they become major problems, resulting in a reduction in the number of defective
products or services. Additionally, there has been an increase in prevention costs, which
shows that the company is making efforts to prevent quality problems from occurring in the
first place.

However, there has been a slight increase in appraisal costs. This could be due to increased
efforts to monitor and measure quality, which is a positive trend, but it may also suggest that
the company is investing more resources in quality control.

Overall, the company's efforts to manage its costs of quality over the two-year period seem to
be trending in a favorable direction, with a decrease in the total cost of quality and a
reduction in internal and external failure costs. However, the company should continue to

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monitor and analyze its cost of quality data to identify areas for improvement and optimize its
quality management efforts.

Requirement N0. 4

(a).

To calculate the expected annual net cash receipts, we need to calculate the total gross
receipts and the total costs.

Total gross receipts: $1,350 per week x 52 weeks = $70,200

Total costs: Rent: $1,700 per month x 12 months = $20,400 Cleaning: $450 per month x 12
months = $5,400 Insurance: $75 per month x 12 months = $900 Maintenance: $500 per
month x 12 months = $6,000 Water cost per wash: $0.20 x 70,200 = $14,040 Electricity cost
per vacuum use: $0.10 x 60% x 70,200 = $4,212

Total costs = $50,952

Net cash receipts = Gross receipts - Total costs Net cash receipts = $70,200 - $50,952 Net
cash receipts = $19,248.

(b).

To calculate the net present value (NPV) of the investment, we need to discount the expected
cash flows at a suitable discount rate. Let's assume a discount rate of 10%.

Initial Investment = -$202,000

1st year: Cash Inflow = $70,200/ (1+10%)1 = $63,818.18

2nd year Cash Inflow = $70,200/ (1+10%)2 = $57851.24

3rd year: Cash Inflow = $70,200/ (1+10%)3 = $47,275.91

4th year: Cash Inflow = $70,200/ (1+10%)4 = $39,601.79

5th year: Cash Inflow = $70,200/ (1+10%)5 = $28117.31.

Total discounted cash inflows = $236,664.43

Net Present Value = Total discounted cash inflows - Initial Investment = $236,664.43 -
$202,000 = $34,664.43

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Since the NPV is positive, the investment in the car wash ist expected to generate sufficient
returns to cover the cost of the investment and the required rate of return. Therefore, it may
be a good investment option.

(c)

Based on our analysis, the net present value of the investment in the car wash is positive and
suggests that the project is profitable. Therefore, we recommend Kent to open the car wash.

However, it's important to note that there are several assumptions and uncertainties involved
in this analysis, such as the accuracy of our estimates, market conditions, and competition.
Kent should carefully consider these factors and conduct further research before making a
final decision.

Requirement No. 5

(a).

To allocate the fixed administrative expenses of $18,800,000 among the three restaurants of
Opera Food & Beverage Company in Sydney for this year, total sales for this year are given
as,
Total Sales = $282,500,000

Now allocating FAC of $18,800,000 to the three restaurants as per their percentage sales,

SHE = 22.12% of $18,800,00

SHE = $ 4,158,560

MGG = 58.41 % of $18,800,000

MGG = $10,981,080

OTS = 19.47% of $18,800,000

OTS = $3,660,360

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Therefore, the fixed administrative expenses allocated to Sydney Harborside Eatry, Malabar
Garden Grill, and Oriental Taste Speciality are $4,158,560, $10,981,080, and $3,660,360,
respectively

(b).

To calculate the change in each restaurants allocated cost from last year to this year, we need
to compare the allocated fixed administrative expenses for each restaurant in both years.

For Sydney Harborside Eatery:

This year allocated cost = $4,158,560

Last year allocated cost = $5,875,000

Change in allocated cost = $4,158,560 - $5,875,000 = -$1,716,440 Decrease

For Malabar Garden Grill:

This year allocated cost = $10,981,080

Last year allocated cost = $7,753,000

Change in allocated cost = $10,981,080 - $7,755,000 = $3,228,080 Increase

For Oriental Taste Specialty:

This year allocated cost = $3,660,360

Last year allocated cost = $5,170,000

Change in allocated cost = $3,660,360- $5,170,000 = -$1,509,640 Increase

Therefore, the change in allocated cost for each restaurant from last year to this year are:

 Sydney Harborside Eatery: -$1,716,440 Decrease

 Malabar Garden Grill: $3,228,080 Increase
 Oriental Taste Specialty: -$1,509,640 Increase

(c).

Using sales dollars as an allocation base can be useful in some cases, but it has its limitations.
One advantage of using sales dollars as an allocation base is that it is simple and easy to
understand. Sales are also closely related to the level of activity in a business, so it can be a

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good indicator of the amount of resources consumed by each restaurant. However, using sales
as an allocation base assumes that all other factors affecting the level of resources consumed
are constant across all three restaurants.

In reality, the amount of resources consumed by each restaurant may depend on other factors
such as the size of the restaurant, the menu items offered, the level of customer service
provided, and the location. Additionally, using sales as an allocation base assumes that each
restaurant has the same profit margin, which may not be the case. For example, if one
restaurant has a higher profit margin than the others, it may be consuming fewer resources for
the same level of sales.

Overall, using sales dollars as an allocation base can provide a rough estimate of the amount
of resources consumed by each restaurant, but it should be used in conjunction with other
allocation methods to get a more accurate picture of the costs associated with each restaurant.

(d).

There could be several possible reasons why the manager of Malabar Garden is unhappy with
the amount charged to the restaurant this year. Some of the possible reasons are:

1. Increase in sales: If Malabar Garden Restaurant experienced a significant increase in

sales compared to the other two restaurants, the allocation of fixed administrative
expenses based on sales dollars would have resulted in a higher amount being charged
to Malabar Garden. The manager may feel that the increase in expenses is
disproportionate to the increase in sales.
2. Differences in operating costs: The allocation of fixed administrative expenses based
on sales dollars assumes that all three restaurants have similar operating costs.
However, if Malabar Garden has higher operating costs than the other two restaurants,
the manager may feel that the allocation method is unfair.
3. Disagreement with the allocation method: The manager of Malabar Garden may
simply disagree with the use of sales dollars as an allocation base. They may believe
that a different allocation method, such as number of customers served or number of
tables, would be more appropriate and fair.
4. Lack of understanding: The manager may not fully understand how the allocation of
fixed administrative expenses is calculated and how it affects the restaurant's bottom
line. They may feel that the amount charged is too high without realizing the impact
of fixed expenses on the profitability of the restaurant.

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Overall, it is important for the company to communicate the allocation method clearly and
transparently to all restaurant managers to avoid misunderstandings and disagreements.

Requirement No.6

(a)

To prepare the financial statement, we need to calculate the revenue, cost of goods sold, gross
profit, and net profit for each product.

1. Tetote (salted butter):

Revenue: Number of units produced = 15,000 Selling price per unit = $11 Total revenue =
15,000 x $11 = $165,000

Cost of goods sold: Cost of milk = $16,000 Allocated batch cost = $16,000 / (15,000 +
25,000) x 15,000 = $6,400 Total cost of goods sold = $16,000 + $6,400 = $22,400

Gross profit: Total revenue - Cost of goods sold = $165,000 - $22,400 = $142,600

2. Koretote (unsalted butter):

Revenue: Number of units produced = 25,000 Selling price per unit = $14 Total revenue =
25,000 x $14 = $350,000

Cost of goods sold: Cost of milk = $16,000 Allocated batch cost = $16,000 / (15,000 +
25,000) x 25,000 = $9,600 Total cost of goods sold = $16,000 + $9,600 = $25,600

Gross profit: Total revenue - Cost of goods sold = $350,000 - $25,600 = $324,400

Therefore, the financial statement for the two products is as follows:

Product Revenue Cost of goods sold Gross profit

Tetote $165,000 $22,400 $142,600
Koretote $350,000 $25,600 $324,400
The profit per batch of each intermediate product that includes the allocated batch cost is
calculated as follows:

Tetote (salted butter):

Gross profit = $142,600 Number of units produced = 15,000 Profit per unit = Gross profit /
Number of units produced = $142,600 / 15,000 = $9.51

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Koretote (unsalted butter):

Gross profit = $324,400 Number of units produced = 25,000 Profit per unit = Gross profit /
Number of units produced = $324,400 / 25,000 = $12.98

Therefore, the profit per batch of Tetote (salted butter) and Koretote (unsalted butter) are
$142,600 and $324,400, respectively, with the profit per unit of $9.51 and $12.98,
respectively.

(b).

To prepare the financial statement assuming Tetote and Koretote are sold after further
processed as Hauora and Reka, we need to calculate the revenue, cost of goods sold, gross
profit, and net profit for each product.

1. Hauora (processed from Tetote)

Revenue: Number of units produced = 15,000 Selling price per unit = $12 Total revenue =
15,000 x $12 = $180,000

Cost of goods sold: Cost of Tetote = $22,400 Cost of processing = $31,550 Total cost of
goods sold = $22,400 + $31,550 = $54,950

Gross profit: Total revenue - Cost of goods sold = $180,000 - $54,950 = $125,050

2. Reka (processed from Koretote)

Revenue: Number of units produced = 25,000 Selling price per unit = $16 Total revenue =
25,000 x $16 = $400,000

Cost of goods sold: Cost of Koretote = $25,600 Cost of processing = $14,320 Total cost of
goods sold = $25,600 + $14,320 = $39,920

Gross profit: Total revenue - Cost of goods sold = $400,000 - $39,920 = $360,080

Therefore, the financial statement for the two products processed further is as follows:

Product Revenue Cost of goods sold Gross profit

Hauora $180,000 $54,950 $125,050
Reka $400,000 $39,920 $360,080
The profit per batch of each Hauora and Reka that includes the allocated batch cost is
calculated as follows:

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 3. Hauora (processed from Tetote):

Gross profit = $125,050 Number of units produced = 15,000 Profit per unit = Gross profit /
Number of units produced = $125,050 / 15,000 = $8.34

4. Reka (processed from Koretote):

Gross profit = $360,080 Number of units produced = 25,000 Profit per unit = Gross profit /
Number of units produced = $360,080 / 25,000 = $14.40

Therefore, the profit per batch of Hauora (processed from Tetote) and Reka (processed from
Koretote) are $125,050 and $360,080, respectively.

(c).

Analysing the profitability of both products as calculated above, we can safely say that
further processing of Tetote Koretote has although increased the profitability of NZ Dairy
Ltd. However, if analyse the profit margins of both set of products;

Product Revenue Cost of goods sold Gross profit G. Profit Margin

Tetote $165,000 $22,400 $142,600 86.4%
Koretote $350,000 $25,600 $324,400 92.6%
Hauora $180,000 $54,950 $125,050 69.4%
Reka $400,000 $39,920 $360,080 90%

So further processing has reduced the profit margins in case of Tetote to Hauora (17%) and in
case of koretote to Reka (2.6%) which should be a matter of concern for the management.
Therefore, giving the decline in profits margins, its not advisable to process the products.

Requirement No. 7

(a).

The Balanced Scorecard (BSC) is a strategic management tool that helps organizations to
align their vision and strategy with their performance measurement system. It consists of four

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perspectives, namely financial, customer, internal business processes, and learning and
growth perspectives.

Here are the possible measures listed in Table 4 and the perspectives of BSC they belong to:

Financial Perspective:

 Percentage of market share

 Sales of patent protected product
 Growth rate of net operating income
 Sales from products less than three years old These measures are related to financial
performance, as they indicate the organization's market share, revenue growth, and
profitability.

Customer Perspective:

 Customer perception about product leadership

 Percent of customers that strongly agree with the statement "Your company is
committed to preserving the environment."
 Percent of customers that strongly agree with the statement "I received the delivery of
my order on time." These measures are related to customer satisfaction and loyalty, as
they indicate how well the organization is meeting customer needs and expectations.

Internal Business Processes Perspective:

 Weight of waste produced

 Manufacturing cycle efficiency
 Number of new products designed
 Number of process improvement suggestions per employee These measures are
related to the organization's internal processes and operations, as they indicate the
efficiency and effectiveness of the processes used to produce and deliver products and
services.

Learning and Growth Perspective:

 Average training hours per employee

 Average years of tenure per employee
 Percent of interview candidates that accepted job offer

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  Percent of revenue from environment-friendly products These measures are related to
the organization's human capital and innovation, as they indicate the organization's
ability to attract and retain talented employees and to innovate in its products and
processes.

(b).

A Balanced Scorecard (BSC) is a performance management tool that aims to align an

organization's strategy with its operations. It measures and tracks key performance indicators
(KPIs) in four different perspectives: financial, customer, internal processes, and learning and
growth. The BSC provides a comprehensive view of the organization's performance, making
it a popular choice for businesses across various industries. In this report, we will explore the
advantages and disadvantages of using a BSC.

Advantages:

1. Alignment of objectives: The BSC helps align an organization's objectives with its
strategy, making it easier to communicate goals and objectives throughout the
company. This alignment ensures that everyone in the organization is working
towards the same objectives, reducing confusion and improving collaboration.
2. Comprehensive view: The BSC provides a comprehensive view of an organization's
performance, enabling management to make informed decisions. It provides a
balanced view of the organization, highlighting both financial and non-financial
aspects of performance.
3. Continuous improvement: The BSC encourages continuous improvement by tracking
KPIs over time. This tracking allows management to identify trends, make changes,
and improve performance.
4. Flexibility: The BSC is flexible, allowing organizations to customize it to meet their
specific needs. This flexibility enables businesses to adapt the BSC to different
industries, environments, and objectives.

Disadvantages:

1. Time-consuming: The BSC requires a significant amount of time and resources to

develop and maintain. It can be challenging to identify relevant KPIs, collect data, and
analyze results.

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 2. Complexity: The BSC is a complex tool, making it challenging to implement and
maintain. It requires specialized knowledge and skills to develop and maintain a BSC,
which can be a barrier for small businesses.
3. Cost: The BSC can be expensive to implement and maintain. It requires the
investment in resources, software, and training, which can be a challenge for small
businesses.
4. Overreliance on metrics: Overreliance on metrics can lead to a tunnel vision approach
where the KPIs become the primary focus, leading to neglect of other important
factors.

Conclusion:

In conclusion, the BSC is a powerful tool for managing an organization's performance, but it
also has its advantages and disadvantages. The BSC is a comprehensive view of performance,
allowing for continuous improvement and alignment of objectives. However, it can also be
complex, time-consuming, and expensive to implement and maintain. Overall, the BSC is a
valuable tool, but organizations need to weigh the pros and cons before implementing it.

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