Shades Ltd, produces and designs a range of high quality sunglasses frames and l

Question

Shades Ltd, produces and designs a range of high quality sunglasses frames and lenses and distributes its products to companics all over the Middie East. The company has been performing well to date and are currently the market leader in this highly competitive industry The sales budget for Shades Ltd for the next six months of the year is as follows and the selling price is estimated at SAR100 per unit July August September October November December Budgeted sales in units 5,000 40,000 50,000 30,000 20,000 10,000 Each pair of sunglasses requires 2 units of raw material. The company is now planning raw materials needs for the third quarter (July, Aug. Sept). To keep production and sales moving smoothly, the company has the following inventory 1. The finished goods inventory on hand at the end of each month must be equal to 3,000 plus 200% of the next month's sales. The finished goods stock on 30 June is budgeted to be 10,000 unats 2. The raw materials stock on hand at the end of each month must be equal to one-half of the following month's production noeds for raw materials. The raw materials stock on 30 June is budgeted to be 54,000 units Requirement a) Prepare the sales budget, production budget and direct for the third quarter materials budget marks) b) Explain the purpose of the balanced scorecard and give two specific examples of performance measures which could be used by Shades Ltd, for each of the following four perspectives: financial, customer, internal and learning (5 marks) Critically evaluate the contribution of the balanced scorecard to supporting the overall competitive strategy of an organisation (5 marks) Total 20 marks

Explanation / Answer

2. The purpose of balance score card is to measure the performance of the organisation by dividing its measure functions into 4 performance indicators namely financial, customer, internal and learning.

Measures are being set for each perspective for measuring its performance. Following are the performance measures used by Shades Ltd:

Financial Perspective :Growth in volume of business / Revenue per unit

Customer Perspective : Increase in number of customers/ Retention of existing customers

Internal Perspective : No of defects in the product/Sales penetration

Learning Perspective : New design of sunglasses/ improved manufacturing process

3.In the current scenario balance scorecard plays a big role in supporing the overall competitive strategy of an organisation. It is mandatory for the organatisation to understand that in which area they are required to improve and which areas are their strong point in which they can have a edge over others.

Balance score card helps the organisation to improve itself on the specific ares they are weak in and can be in competition with others

Sales Budget July August September Total EstimatedSales During the Month (in units) (A) 35000 40000 50000 125000 Selling price per unit (B) 100 100 100 Estimated Sales (A*B) 3500000 4000000 5000000 12500000

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