Meredith Ltd makes a special-purpose machine D4H used in the textile industry. Meredith has designed the D4H machine for 2015 to be distinct from its competitors. It has been generally regarded as a superior machine. Meredith presents the following data for the years 2014 and 2015.

Meredith produces no defective machines, but it wants to reduce direct materials usage per D4H machine in 2015. Conversion costs in each year depend on production capacity defined in terms of D4H units that can be produced, not the actual units of D4H produced. Selling and customer-service costs depend on the number of customers that Meredith can support, not the actual number of customers Meredith serves. Meredith has 75 customers in 2014 and 80 customers in 2015. At the start of each year, management uses its discretion to determine the number of design staff for the year. The design staff and costs have no direct relationship with the quantity of D4H produced or the number of customers to whom D4H is sold.
Required
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.

Transcribed Image Text:

1 Units of D4H produced and sold 2 Seling price 3 Direct materials ilograms 4 Direct materials cost per kilogram 5 Manofacturing capacity in units of D4H E40 000 300 000 42 000 310 000 Total coaversion costs 7 Conversion costs per unit of capacity 2000000 68 000 100 customers E1 000 000 2 02s 000 8 100 95 customers 940 500 Selling and customer-service capacity 9 Total selling and customer-service costs 10 Sedling and customer-service capacity £10 000 E9900 cost per austomer 11 Deign staff 12 Total design costs 13 Design cosさper employee 1 200 000 £100 000 1 212 000 101 000