Discuss the balanced scorecard, in your discussion you should Evaluate different perspectives of balanced scorecard (Financial, Internal business, learning and growth and Customer), in terms of their objectives and measurements.

Senior management of the company use different measurements to understand the effectiveness performance of the company. Management also understands the traditional financial accounting. Different measures to learn about the investment and return on the investment with the signals of different improvement and innovations. There are financial measures that all necessary to take the in the financial management to learn about the performance of operational measures of the project. There are different expect to measure the performance of the company, but there is an important aspect of that is used by management is called balance the scorecard. There are different for perspective offer balanced scored card measured the performance of the business such as the customer perspective, internal perspective and shareholders or financial perspective. The first measure is Perspective of customers that the company is reacting to the elements of the competitive agenda and to become customer oriented in the market by improving the quality of the product.

There are many companies that are focusing on the improvement of customer retention. The balance scorecard requires that manager translate to different mission statement to the customer to give them better services and reflection of their customer in the product matter. The second scorecard measurement is based on the internal perspective. Balanced score card is used to learn and improve the area of the company that are related to improve the management and implementation of management rules in the production of different goods and commodities. Internal business perspective relates to the goals such as technology capability, manufacturing excellence, and redesign productivity that related to measures that different production performance and efficiency, and effectiveness of the production in the different project. The financial perspective of food company is to survive and success in the market with the objectives that are retained to gain in the given financial. The balanced score card measures are based on cash flow, quarterly sales and other in market shares to increase their return on equity. All these measures are used to get the performance of the company through Balance score card (Xiang-gang & Yue, 2006).

Question 2

(i)     Calculate the breakeven points in units:

Breakeven in bundles = fixed cost / contribution margin per bundle

                                    = $1800, 000/ $60

                                    = $30,000

The breakeven point is 225000 for standard units and 70000 for deluxe unit sold.

a)      If only standard are sold, the breakeven point is

=247,500 units

b)      If only deluxe are sold, the breakeven point is

=123,750 units

(ii)  Calculate the breakeven points in Revenue

(i)                 If only standard products are sold

=202,500 units

(ii)              If only deluxe products are sold 

=22,500 units

©    How many units need to be sold to achieve a target profit if only standard products are sold?

There must be at least 202,500 unit of standard sold to attain the targeted profit in the market.

(d)     What do you understand by margin of safety? Briefly explain different steps which can be used to improve margin of safety.

Margin of Safety is actual sales and breakeven sales that is based on different kind of sales revenue that is generated about the breakeven point. Margin of safety is section of the sales revenue to generate the profit for the business because the sale volume is based on the cost and the profit earned from the financial year (Dilks & Freedman., 2004). There are different stages of margin of safety such as:

·         Increase contribution per unit

·         Increases volume

·         Increase output

·         Adopt better profitable marketing indexing

·         To reduce the fixed cost

Question 3

a)      Material Price Variance

Sales Price Variance

Sales Volume Profit Variance

b)     Explain possible reasons and interrelationship for labor, material and sales variances calculated in part (a) above.  

Standard costing system is used for improved cost control and company could gain that is used to maximize their profit with the minimum cost. Standard cost to provide different point that are used to measure the effectiveness of the manners and controlling the cost in the different projects. If the above variances are analyzed than it can be said that material variances are unfavorable. Labor rate variance and sales price variance shows favorable variance.

c)      As suggested by Production manager standard costing (Variance analysis) is a tool for control. Evaluate the Advantages of  Variance Analysis  for the organization

Following are the five benefits that are related to the business by using standard costing system.

·         Standard costing system is used for improved cost control and company could gain that is used to maximize their profit with the minimum cost. Standard cost to provide different point that are used to measure the effectiveness of the manners and controlling the cost in the different projects

·         The information that is used in the military planning and decision making or based on the appropriate methods of the standard costing. It helps to learn about the future cost and the actual cost as compared to buy state cost that are implemented on a specific project.

·         There are different, reasonable and easier ways to measure the inventory according to the standard cost method. Under the actual code system unit cost for different batches could differ from the actual and visited, but in standard costing standard cost are implemented for race checking the actual cost.

·         It has to cost saving in record keeping and require more detail during the accounting. Than actual cause system.

·          It helps to gain the cost saving in the project. With the help of standard costing system extra cost is not estimated that give opportunity to save the cost of the financial project.

Question 4

If company is using the above machine, what is the relevant cost and what is irrelevant cost of the information available about the machine. Explain all the costs clearly.    

If the company has decided to utilize the machine than the relevant cost would be the amount of revenue. The increase or decrease in the amount of revenue will affect the cash flow therefore the amount of revenue will be relevant cost. The original purchase price of machine can be described as sunk cost or past cost so it will not be a relevant cost. Similarly book value of the machine will have no effect on the cash flow of the business and that is why it will be treated as irrelevant cost of the business.

What do you understand by relevant cost? Explain the different Elements of Relevant Costing.                                                                                                                             

The relevant cost can be explained as the cost which is associated with the decision which the management of the organization takes. The cost is considered relevant if it causes change in the cash flow which occurs due to the decision which the organization has taken. The change that can occur in the cash flow includes:

·         the Amount which the business must pay

·         a decline in amount which should be paid

·         a revenue that organization might earn

·         a decline in revenue that organization might experience

The change in the cash flow can be identified from the financial statements which the organization prepare. The bank statements can also be used for knowing whether the decision have increased the cash flow of the business or has declined the cash flow. The costs which are consider irrelevant are mentioned as follows:

·         Sunk cost/past costs

·         fixed costs

·         Book values and Depreciations

The costs which are considered relevant include forgone revenues and increase or decrease in the cash flows occur due to project.

References of Cost and Management Accounting

Chandra, P. (2011). Financial Management. Tata McGraw-Hill Education.

Dilks, D. W., & Freedman., P. L. (2004). "Improved consideration of the margin of safety in total maximum daily load development. Journal of Environmental Engineering, 130(4), 690-694.

Warren, C., Reeve, J. M., & Duchac, J. (2016). Financial & Managerial Accounting . Cengage Learning.

Xiang-gang, P. E., & Yue, Q. I. (2006). Balance Scorcard and Strategy Management of Public Service-Oriented Government [J. Journal of Sun Yatsen University (Social Science Edition) 1 .