Strategy balanced scorecard. Meredith Corporation makes a special-purpose machine, D4H, used in the textile industry. Meredith has designed the D4H machine for 2009 to be distinct from its competitors. It has been generally regarded as a superior machine. Meredith presents the following data for 2008 and 2009.

Meredith produces no defective machines, but it wants to reduce direct materials usage per D4H machine in 2009. Conversion costs in each year depend on production capacity defined in terms of D4H units that can be produced, not the actual units produced. Selling and customer-service costs depend on the number of customers that Meredith can support, not the actual number of customers it serves. Meredith has 75 customers in 2008 and 80 customers in 2009. At the start of each year, management uses its discretion to de mine the number of design staff for the year. The design staff and its costs have no direct relationship with the quantity of D4H produced or the number of customers to whom D4H is sold.

1. Is Meredith’s strategy one of product differentiation or cost leadership? Explain briefly.

2. Describe briefly key elements that you would include in Meredith’s balanced scorecard and the reasons for doing so.

2008 2009 1. Units of D4H produced and sold 2. Selling price 3. Direct materials (kilograms) 4. Direct material cost per kilogram 5. Manufacturing capacity in units of D4H 6. Total conversion costs 7. Conversion cost per unit of capacity 8. Selling and customer-service capacity 9. Total selling and customer-service costs 10. Selling and customer-service capacity cost per customer 200 210 S40,000 S42,000 300,000 310,000 S8 S8.50 250 250 $2,000,000 $2,025,000 8,100 $8,000 100 customers 95 customers $1,000,000 $940,500 $9,900 $10,000 11. Design staff 12. Total design costs 13. Design cost per employee 12 12 $1,200,000 $100,000 $1,212,000 $101,000