Management Accounting Project

AC4321 Management Accounting

City University of Hong Kong

21th November 2014

Li, Lin Long 53062570

Wang, Qiao 53062648

Wu, Corinne 40063644

Yang, Han 53063160

Part A:

Part A:

Part A Continued:

The company needs to have more trained salesclerks so that they can correctly enter the data to the customers’ accounts. Moreover, with more trained employees there will be less errors revolving around their accounts. As a result, the monthly customers’ surveys should show that customers are more satisfied with the accuracy of their charged account.

Furthermore, if the errors are minimized we will assume that customers will have fewer disputes over the correctness of their bill and will begin to pay on time; thus, the average age of accounts receivable should decrease, which results in the decrease of written-off accounts receivable (bad debts) as a percentage of sales and then increase in total profits.

In addition, the company should have more suppliers making just-in-time deliveries so that there will be less unsold inventory at the end of the season. Hence, we can avoid reselling them at a loss to discount stores which will result into an increase to both the total sales and total profits.

Part B:

Although the strategies laid out in the balanced scorecard are plausible but that does not necessarily mean that everything will fall correctly into place. The advantage of balanced scorecard is that we can continuously test the “cause and effect” relationship between different performance measures. Since there were some performances that did not show improvements, we will need to presumably backtrack and figure out what could have possibly went wrong when we were developing the “cause and effect” relationships.

For example, management needs to check whether we have established inappropriate strategies with false assumptions or identified incorrect performance measures to set up the balanced scorecard. Moreover, management should also investigate...