Meredith Ltd makes a special-purpose machine D4H used in the textile industry. Meredith has designed the D4H machine for 2022 to be distinct from its competitors. It has been generally regarded as a superior machine. Meredith presents the following data for the years 2021 and 2022.

Meredith produces no defective machines, but it wants to reduce direct materials usage per D4H machine in 2022. 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 customerservice costs depend on the number of customers that Meredith can support, not the actual number of customers Meredith serves. Meredith has 75 customers in 2021 and 80 customers in 2022. 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 Selling price 3 Direct materials (kilograms) 4 Direct materials cost per kilogram 5 Manufacturing capacity in units of D4H 6 Total conversion costs 7 Conversion costs 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 11 Design staff 12 Total design costs 13 Design costs per employee 2021 200 2022 210 40 000 42.000 300 000 310 000 8 8.50 250 250 2 000 000 2 025 000 8.000 8 100 100 customers 1 000 000 10 000 95 customers 940 500 9 900 12 12 1 200 000 1 212 000 100 000 101 000