343317

PowerPoint
Presentations for
Cornerstones of
Cost Accounting
First Canadian Edition
Adapted by
George Gekas
Ryerson University
Copyright © 2013 Nelson Education Ltd.

THE BALANCED
SCORECARD:
STRATEGIC-BASED 15
CONTROL
15-2
Activity-Based versus Strategic-
Based Responsibility Accounting 1
The Responsibility Accounting Model

• Four essential elements:
1. Assigning responsibility
2. Establishing performance measures or benchmarks
3. Evaluating performance
4. Assigning rewards
• Financial-based responsibility accounting model

emphasizes financial performance of organizational
units and evaluates and rewards performance using
static financial-oriented standards
15-3
An activity-based system
adds a process
perspective to the A strategy-based
financial perspective of responsibility accounting
the functional based system translates the
responsibility accounting strategy of the
system organization into
operational objectives and
measures
15-4
The Balanced
Scorecard is a strategic-
based performance
management system
that typically identifies
objectives and
1. The Financial Perspective
measures for four
different perspectives 2. The Customer Perspective
3. The Process Perspective
4. The Learning and Growth
Perspective
15-5
Responsibility
Responsibility Assignments
Assignments Compared
Compared
15-6
Performance
Performance Measures
Measures Compared
Compared
15-7
Performance
Performance Evaluation
Evaluation Compared
Compared
15-8
Rewards
Rewards Compared
Compared
15-9
Basic Concepts of the
2
Balanced Scorecard
The Balanced Scorecard
• Permits an organization to create a strategic focus by
translating an organization’s strategy into operational
objectives and performances measures for four
different perspectives:
1. The financial perspective
2. The customer perspective
3. The internal business process perspective
4. The learning and growth (infrastructure) perspective
15-10
2
Balanced Scorecard
What is strategy?
•Strategy is defined as*:
choosing the market and customer segments the business
unit intends to serve, identifying the critical internal and
business processes that the unit must excel at to deliver the
value propositions to customers in the targeted market
segments, and selecting the individual and organizational
capabilities required for the internal, customer, and financial
objectives
*Kaplan and Norton, The Balanced Scorecard, 37.

15-11
2
Balanced Scorecard
15-12
2
Balanced Scorecard
Financial
Financial Perspective
Perspective
15-13
2
Balanced Scorecard
Customer Value:
• The difference between realization and sacrifice,
where realization is what the customer receives
and sacrifice is what is given up
15-14
2
Balanced Scorecard
Customer
Customer Perspective
Perspective
15-15
2
Balanced Scorecard
Process
Process Perspective
Perspective
15-16
2
Balanced Scorecard
• Responsiveness
• The time it takes a company to respond to a
customer order
• Cycle Time
• The length of time it takes to produce a unit of
output from the time materials are received until
the good is delivered to finished goods inventory
• Velocity
• The number of units of output that can be
produced in a minute, hours, or a given period of
time
See Cornerstone 15-1
15-17
2
Balanced Scorecard
Manufacturing
Manufacturing Cycle
Cycle Efficiency
Efficiency (MCE)
(MCE)
MCE = Processing time/(Processing time + Move time

+ Inspection time + Waiting time + Other non-value-
added time)
In this equation, processing time is the efficient or ideal
time it takes to convert materials into a finished good.
The other activities and their times are viewed as
wasteful and the goal is to reduce those times to zero.
See Cornerstone 15-2

15-18
2
Balanced Scorecard
Learning
Learning and
and Growth
Growth Perspective
Perspective
15-19
Linking Measures to
3
Strategy
 Single-Loop Feedback
• Emphasizes effectiveness and implementation and the
variances may result from strategic standards and actual
implementation
 Double-Loop Feedback
• Emphasizes both effectiveness of strategy implementation
and validity of the assumptions built in the strategy
• Hypothesis testing makes possible to adapt and change
strategy
 Strategy Map
• Graphically illustrates cause-effect linkages of strategy and
operating activities
15-20
Strategic Alignment 4
15-21
Strategic Alignment 4
 Objectives, targets, initiatives, and allocation of
resources must follow strategy and be aligned to it
 Scorecard objectives need to be articulated and
communicated to all employees
 Linkages must be established between personal and
organizational goals to achieve goal congruence
 Performance expectations need to be established
15-22
End of
Chapter 15
15-23

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Copyright © 2013 Nelson Education Ltd.

The Responsibility Accounting Model

• Financial-based responsibility accounting model

*Kaplan and Norton, The Balanced Scorecard, 37.

MCE = Processing time/(Processing time + Move time

See Cornerstone 15-2

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