Expert answer:comment in the cases
Expert answer:please make comment on every case, every comment half page, the comment reply in the case you may agree to some point or not agree or you can talk about some point in the caseNote:There are 7 cases I need 7 comments . Write the number of the case next to the comment
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case_3_and_4.pdf
case_5.pdf
case_6.pdf
case_7.pdf
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CASE 1
The Demise of Cost and Profit Centers
Summary of the Case
The case is written Robert S. Kaplan where he elicits a discussion on the changes experienced
in management that seeks to write wrongs of measuring performance. Robert S. Kaplan looks
into the traditional measures of management performance that lays emphasis on financial
metrics to judge the outputs of entities. Balanced scorecard is a strategic tool of performance
evaluation that initiates an integrated framework of enhancing the management control system
for better outcomes through analysis of a broader framework. The introduction of the balanced
scorecard by Robert Kaplan delivered a more comprehensive framework of ascertaining
managerial expertise. The balanced scorecard has yielded significant transformation in the
managerial accounting field through the solutions it provides in establishing a more progressive
approach to evaluating business performance.
The traditional five fundamental tools of determining the input of organizational units towards
boosting performance strategy failed to create a structure for better evaluation of performance.
Kaplan through the balanced scorecard looked at the provisions of a management control
system for purposes of understanding the decentralized organizational units. The tools include
the profit, cost, revenue, investment and discretionary expenses center are some of the
significant elements used to asserting the best criteria of assessing performance. Nonetheless
the different tools do not create substantive efforts in establishing a detailed successful
undertaking of not only the financial metrics but qualitative impact of managerial input (Kaplan,
293). The revolution of the balanced scorecard initiated by Robert Kaplan and Dave Norton in
the early 1990s sought to establish a higher standard in assessment performance. The
balanced scorecard offers a more comprehensive approach to managing the performance
evaluation process. Managerial accounting develops a framework in which one is required to
make management plans and decisions based on a series of performance measurement
metrics.
There are a series of developments that infer the limitation of the financial metrics in asserting a
credible measurement structure. Performance measurement requires a look on both the
qualitative and quantitative aspects of ascertaining the management input towards creating
significant progression in the organizational units. The financial metrics does not make an
explicit understanding of better ways of determining the qualitative input of managers in terms of
customer value, improved quality and responsiveness of the operating processes. The
management framework requires demonstrating a system that appreciates how their
contribution in performing their roles goes a long way towards creating value for the
organizational units. Even though the balanced scorecard established a generalized approach
in creating a performance assessment, there is a significant need to for understanding the
benefit of the cost and investment centers in management.
A profits center is an element in accounting that considers the ability of a business undertaking
to yield gains from the sale of certain goods and services. The profit is ascertained through
taking the revenues realized in each period for an activity and subtracting the costs of
recognizing such revenues to arrive at the profit center. Cost center, on the other hand, involves
the standard production or operating unit that is determined based on the expected outcomes
for an organization towards ensuring it meets the objectives of the entity (Kaplan, 295). The
purpose of the cost center is to ensure that necessary steps are put in place for purposes of
creating an environment in which every aspect of the organization moves seamlessly. The
balanced scorecard delivered a solution towards better understanding how to analyze the
performance of an organization. It is unfair to only rely on profit and cost centers
notwithstanding their significant contribution in performance evaluation.
Management accounting is a technical undertaking that equips one with professional expertise
on matters of judgment that is based on strict adherence to laid down ethical and professional
principles. The balanced scorecard introduced in the 1990s was required to play a pivotal role
towards the limitation of financial metrics as assessment tools of determining performance
levels (Kaplan, 296). The balanced scorecard introduced a new dispensation that affords the
organization the ability to implement significant steps that assure transformation in evaluating
the performance of an entity. Despite the contribution of the quantitative measures of
management performance, it was evident that it provided a substantial improvement in financial
performance measurement of an organization.
The transformation of the cost center yielded significant progression in the creation of a system
where it ensured an in-depth understanding of how to manage organizational costs and
revenues. The establishment of a framework that creates an integrated order in which the
different sections of costing are linked the analysis of employee performance. The system
should take consideration of all the underlying instruments that demonstrate the ability of a
business entity to exhibit better performance in the market. Business is an integrated process
that links processes to employees thereby making performance dependent on human resource
input. The creation of a framework that will allow an organization to manage their costs and
investments towards ensuring they create a considerable progression for purposes of success
in their endeavors.
Relationship of Case to future Work Experience
In the banking industry where I intend to serve uses several aspects of standard costing to
provide a plan of action and analysis of performance. Management of the banking industry will
significantly benefit through understanding and implementing the balanced scorecard that
delivers a comprehensive performance measure framework. The transformation from the profit
center and cost center through the introduction of the balanced score card is a welcomed move
in ensuring the execution of management duties. Performance evaluation in the bank will be
efficient since the balanced scorecard takes on a more broad approach that could be used for
valuable decision making. The banking industry operates in a very competitive environment
that would require the management team to have an upper hand in the qualitative aspects of
their input for creating quality consumer experience. The establishment of a system that
advocates for management action based on integrated aspects of business performance will
ensure that working in bank is a success. An audit of the quality of management input is a
significant imperative that cannot be ignored by any entity that desires to establish impeccable
performance in different dynamic market segments. In my opinion the transformation of the
traditional financial metrics give credence to the performance evaluation process in the banking
sector that assures quality outputs in management circles.
Relationship of Case to Material Covered in Class
The understanding of the balanced scorecard model equips the thinking of an individual into a
system of justifying the reasons and rationale that guided their resolutions on several matters.
The course enhanced my thinking on a broader perspective primarily on how I interacted with
other students in promotion of future professional practice. A performance assessment
mechanism should arrive at a more objective outcome that considers both the qualitative as well
as quantitative aspects of management input in execution of organizational roles.
Performance evaluation is a practice that is expected to provide substantive progression in the
execution of different organizational roles towards exhibiting better performance. The
transformation of the traditional financial metrics that failed to establish qualitative input of
management is advanced through initiation of a balanced scorecard. The balanced scorecard
was an evolution of the management function towards offering a more integrative model of
performance assessment for an organization. It is essential to underscore the fact that
resources are limited in society and a profession that teaches one the art of arriving at an
activity that would efficiently utilize the scarce resources for better outcomes. The maximization
of value is only possible after a meticulous review of the available opportunities for an
organization. As a management accountant, it would be easy to analyze the available resources
in terms of capital or debt financing required to make sure it yields maximum value for the
shareholders.
Conclusion
It is critical to underscore the fact that the balanced scorecard is responsible for the
transformation to an integrated system of accounting. Balanced scorecard considers several
components of administration from investment, revenue and cost management offering
considerable value on probable courses of action in different circumstances. Administration of
an organization should take cognizance of the various aspects that determine the success or
otherwise of the entity and ensure a candid analysis towards limiting any loss of business
opportunity. It is through the understanding of the balanced scorecard that I intend to initiate
significant changes to substantially influence my role in the banking industry by establishing the
value for money initiatives. A better management of the accounting framework requires that one
takes cognizance of proper utilization of resources to achieve significant gains in the market
CASE 2
Effective Long-Term Cost Reduction: A strategic Perspective
Summary
This article explains why Traditional programs tend to be short term in nature and
ineffective in developing long term sustained change. There are five traditional cost
reduction programs which are used and include:The technology approach- Focuses on
replacing direct labor with technology to increase the efficiency and reduce the number
of unions. This approach is used when in case of poor performance and has not worked
in many companies especially those in which labor cost is a small percentage of the
total production cost.
Lean and Mean uses the policy of reducing the number of employees. The approach is
through laying off employees but eventually it does not reduce the job that needs to be
done of creating and selling of products. Offshore retreat depends on cost reduction by
moving to a different location for example Asia. The policy works on how employees are
treated utilizing exchange rate and the currency fluctuations. Eventually the employees
are laid off when the firm moves the job offshore.
In the article Mergers is also a traditional program that is mentioned. Mergers creates
an economy of scale as the idea is to elimi …
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