Stanmore corporation makes a special-purpose machine, D4H, used in the textile industry. Stanmore has designed the D4H machine for 2013 to be distinct from its competitors.
It has been generally regarded as a superior machine. Stanmore presents the following data for 2012 and 2013.
| 2012 | 2013 | |
| 1.Units of D4H produced and sold | 200 | 210 |
| 2.Selling price | $40,000 | $42,000 |
| 3.Direct materials (kilograms) | 300,000 | 310,000 |
| 4.Direct material cost per kilogram | $8 | $8.50 |
| 5.Manufacturing capacity in units of D4H | 250 | 250 |
| 6.Total conversion costs | $2,000,000 | $2,025,000 |
| 7.Conversion cost per unit of capacity (row6/row5) | $8,000 | $8,100 |
| 8.Selling and customer-service capacity | 100 customers | 95 customers |
| 9.Total selling and customer-service costs | $1,000,000 | $940,500 |
| 10.Selling and customer-service capacity cost per customer
(row9/row8) |
$10,000 | $9,900 |
Stanmore produces no defective machines, but it wants to reduce direct materials usage per D4H machine in 2013. Conversion costs in each year depend on production capacity defined in term of D4H units that can be produces, not the actual units produced. Selling and customer-service costs depend on the number of customers that Stanmore can support, not the actual number of customers it serves. Stanmore has 75 customers in 2012 and 80 customers in 2013
Is Stanmore’s strategy one of product differentiation or cost leadership? Explain briefly
Describe briefly key measures that you would include in Stanmore’s balanced scorecard
and the reasons for doing so
