Selection of Balanced Scorecard Items
The International Accountants' Association is a professional association. Its current membership totals 97,600 worldwide. The association operates from a central headquarters in New Zealand but has local membership units throughout the world. The local units hold monthly meetings to discuss recent developments in accounting and to hear professional speakers on topics of interest. The association's journal, International Accountant, is published monthly with feature ankles and topical interest areas. The association publishes books and reports and sponsors continuing education courses. A statement of revenues and expenses follows:
INTERNATIONAL ACCOUNTS ASSOCIATION
Statement of Revenues and Express
For Year During November 30,2014
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Revenues
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$26700000
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Expenses
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........
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Salaries
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$14,000,000
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Other personal costs
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3400,000
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Occupancy costs
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2,000,000
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Reimbursement to local units
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800,000
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Printing and paper
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320,000
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Postage and shipping
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114,000
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General and administrative
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538,000
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Additional information follows:
• Membership dues are $200 per year, of which $50 is considered to cover a one-year subscription to the association's journal. Other benefits include membership in the association and unit affiliation.
• One-year subscriptions to International Accountant are sold to nonmembers for $80 each. A total of 2,500 of these subscriptions were sold. In addition to subscriptions, the journal generated $200,000 in advertising revenue. The cost per magazine was $20.
• A total of 30,000 technical reports were sold by the Books and Reports Department at an average unit selling price of $45. Average costs per publication were $12.
• The association offers a variety of continuing education courses to both members and nonmembers. During 2014, the one-day course, which cost participants an average of $250 each, was attended by 31,300 people. A total of 1,985 people took two-day courses at a cost of $400 per person.
• General and administrative expenses include all other costs incurred by the corporate staff to operate the association.
• The organization has net capital assets of $44,000,000 and had an actual cost of capital of 11 percent.
Required
a. Give some exam r Key financial performance indicators (no computations needed) that could be part of a balanced scorecard for the IAA.
b. Give some examples of key customer and operating performance indicators (no computations needed) that could be part of a balanced scorecard for IAA.Materials Variances
1. North Wind manufacturers decorative weather vanes that have a standard materials cost of two pounds of raw materials at $1.50 per pound. During September, 5,000 pounds of raw materials costing $1.75 per pound were used in making 2,400 weather vanes.
Required:
Determine the materials price and quantity variance. For a typical $120,000 investment in equipment with a five-year life and no salvage value, determine the present value of the advantage resulting from the use of double-declining balance, depreciation as opposed to straight-line depreciation. Assume an income tax rate of 35 person and a discount rate of 16 percent. Also assume that there will be a switch from double declining balance to straight-line depreciation in the fourth year.
. Payback Period and NPV: Taxes and Straight-Line Depreciation
Assume that United Technologies Corporation is evaluating a proposal to change the company manual design system to a computer-aided design (CAD) system. The proposed system is expected to save 9,000 design hours per year; an operating cost savings of $45 per hour. The annual cash expenditures of operating the CAD system are estimated to be $200,000. The CAD system requires an initial investment of $550,000. The estimated life of this system is five years with no salvage value. The tax rate is 35 percent, and United Technologies uses straight-line depreciation for tax purposes. United Technologies has a cost of capital of 14 percent.
Required a. Compute the annual after-tax cash flows related to the CAD project.