1. Cost Management ACCOUNTING AND CONTROL
HANSEN & MOWEN

2. The Balanced Scorecard: Strategic-Based Control
CHAPTER 13
The Balanced Scorecard: Strategic-Based Control

3. Activity-Based versus Strategic-Based Responsibility Accounting
OBJECTIVE 1
The activity-based system adds a process perspective to the financial perspective of the functional-based responsibility accounting system.
A strategy-based responsibility accounting system translates the strategy of the organization into operational objectives and measures.

4. Activity-Based versus Strategic-Based Responsibility Accounting
OBJECTIVE 1
The Balanced Scorecard is a strategic-based performance management system that typically identifies objectives and measures for four different perspectives.
The financial perspective
The customer perspective
The process perspective
The learning and growth perspective

5. Responsibility Assignments Compared
Activity-Based versus Strategic-Based Responsibility Accounting
OBJECTIVE 1
Responsibility Assignments Compared

6. Performance Measures Compared
Activity-Based versus Strategic-Based Responsibility Accounting
OBJECTIVE 1
Performance Measures Compared

7. 1 Activity-Based versus Strategic-Based Responsibility Accounting
OBJECTIVE 1
Performance Evaluation Compared: ABC versus Strategic-Based

8. 1 Activity-Based versus Strategic-Based Responsibility Accounting
OBJECTIVE 1
Rewards Compared

9. 2 Basic Concepts of the Balanced Scorecard
OBJECTIVE 2
Strategy is choosing the market and customer segments the business unit intends to service, 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.

10. 2 Basic Concepts of the Balanced Scorecard
OBJECTIVE 2
Process value analysis is fundamental to activity-based responsibility accounting, focuses on accountability for activities rather than costs, and emphasizes the maximization of systemwide performance instead of individual performance.
Process value analysis is concerned with:
(1) Driver analysis
(2) Activity analysis
(3) Performance measurement

11. Strategy Translation Process
Basic Concepts of the Balanced Scorecard
OBJECTIVE 2
Strategy Translation Process

12. 2 Basic Concepts of the Balanced Scorecard
OBJECTIVE 2
Summary of Objectives and Measures: Financial Perspective

13. Only financial measure among core objectives
Basic Concepts of the Balanced Scorecard
OBJECTIVE 2
Summary of Objectives and Measures: Customer Perspective
Only financial measure among core objectives

14. 2 Basic Concepts of the Balanced Scorecard
OBJECTIVE 2
Customer value is the difference between realization and sacrifice, where realization is what the customer receives and sacrifice is what is given up.

15. Cycle time and velocity are two operation measures of responsiveness.
Basic Concepts of the Balanced Scorecard
OBJECTIVE 2
The time it takes a company to respond to a customer order is referred to as responsiveness.
Cycle time and velocity are two operation measures of responsiveness.
Cycle time (manufacturing) is 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 is the number of units of output that an be produced in a given period of time.

16. 2 Basic Concepts of the Balanced Scorecard Conversion Cost Example
OBJECTIVE 2
Conversion Cost Example
A company has the following data for one of its manufacturing cells:
Theoretical velocity: 40 units per hour
Productive minutes available (per year): 1,200,000
Annual conversion costs: $4,800,000
Actual velocity: 30 units per hour

17. Conversion Cost Computations
Basic Concepts of the Balanced Scorecard
OBJECTIVE 2
Conversion Cost Computations

18. 2 Basic Concepts of the Balanced Scorecard
OBJECTIVE 2
Summary of Objectives and Measures: Process Perspective

19. 2 Basic Concepts of the Balanced Scorecard
OBJECTIVE 2
Summary of Objectives and Measures: Learning and Growth Perspective

20. Strategy Map: Testable Strategy Illustrated
OBJECTIVE 3
Linking Measures to Strategy
Strategy Map: Testable Strategy Illustrated

21. ABM Implementation Model
Strategic Alignment
OBJECTIVE 4
ABM Implementation Model

22. End of Chapter 13