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Now that you have completed the assignments repeat Assignment 1. Specifically, incorporate what you have learned about Eastvaco and the Charlotte facility to answer the following: (include what you learned from the financial statements and the assignments) Your answer should be well written and organized. 1. Refer to your initial analysis. Has your answer changed, and if so, how?,I tried attaching the file but it wouldn't, so i cut and pasted it. ASSIGNMENT1 CASE 2-48 (a) What are some of the general advantages of and the areas of concerns surrounding the linking of compensation to a Balanced Scorecard? Some of the general advantages of linking compensation to a Balanced Scorecard are; It ensures that incentives are linked with the Balanced Scorecard?s organizational goals. Incentives, particularly monetary incentives are very strong motivation for employees. Employees will work harder, delivering more quality and efficient output or work in order to reap the rewards. Though employees are extrinsically motivated by the Balance score card, they can also be Intrinsically motivated as they become more in tune with company?s goals and appreciate their importance in actualizing these goals. Employees who not only recognize their importance but are duly recognized and rewarded for their hard work, are key to making that particular company more successful. In regards to concerns surrounding the Balance score card, since an employee?s compensation relates to the score card, it is pertinent that the score cards truly and fairly reflects an employee?s output. Thus data collected should be accurate so that there is an accurate measure/analysis of performance can be arrived at. Executive/ upper management may not be certain whether mid managers are selecting factors that positively impact the scorecard. In order to decipher whether or not this is the case, this may require holding off on link compensation to the scorecard for some months. It?s given a trial run until it can be verified that the scorecard measures are realistic. Also it is extremely important that the varied measures reflected on the scorecard do not solely compensate short term goals, since employee output will run proportionally with rewards. It the extrinsic motivation disappear, then along it could be the employees zeal to do their best work. Another concern is management being able to assess and evaluate what goals/ objectives were completed and to what degree to accurately arrive at an appropriate incentive. So if objectives are not meet to a certain degree or beyond a certain degree would be determining factors whether an employee?s output is even to be rewarded. Another concern is whether a company is able to compensate employees if they are not profitable. The balance scorecard could also specify that if the company does not have an overall annual profit of 10%, then it would not be in the position to monetarily reward employees. Certainly this could be even more advantageous for the company, since the focus of employee performance would go beyond only a few localized groups performance, since the overall success of the company will affect all employees. Hence, it would motivate employees to all work equally hard. (b)Evaluate M&R?s approach to linking compensation to multiple measures (Balance Scorecard Measures) including its system of assigning degrees of difficulty to achieve targets. In your response, consider the process that is involved in developing the compensation scheme. M&R?S approach was developed around the Balance Scorecard. Each measurement has a fixed percentage which makes calculation easier and more straight forward when calculating bonuses/ rewards. Also creating levels of difficulty in completing objectives further not only increased possible rewards but motivated employees to push more to reach bigger goals. This created a healthy balance. If all objectives were easily accomplished, it would be clear that employees were not challenged and the company wasn?t reaching its full potential. Also assigning difficulty score to objectives reflect the degree of compensating an employee. Performance-related pay or monetary related pay schemes are is quiet attractive to employees and encourages them to meet then organization?s objectives. M&R ensured that their evaluative method was viewed and deemed fair by all. Management permitted to the entire employee populous review and get clarification on the scorecard before it Was implemented. All associates of M&R trusted the evaluation tools and found it to be fair. M&R has three levels of compensation, business unit, corporate and division. The previously mentioned allows employees to hone into their area or strength in the company whether in a more localized role departmentally or more broadly in a division. Since, employees benefit from the overall performance of their department or division, it foster more team working order to attain goals. Hence employees do not solely work on their tasks they contribute to the team objectives. Employees can easily become robotic and work just enough to successfully complete an objective in order to get a reward. Hence it is important that objectives aren?t always easily attainable. More importantly management must not negate the importance of going beyond extrinsically motivating their employees. It is essential that employees feel personally invested and a part of the company, that each and everyone contribute to the company?s success. Initial Analysis of Eastvaco and the Charlotte Facility: Read the financial statements and supplemental information provided by the 10-K submission and the Charlotte facility schedules. Attempt to gain some insight into how the company and its Charlotte plant are doing. Specifically, answer the following: Required: 1. What do you see as Eastvaco?s strengths and weaknesses? Eastvaco Corporation was founded in 1899 in Delaware. The company was a West Virginia Pulp and Paper Company, and was a major paper producer. Along with it production of paper Eastvaco converts paper and paperboard into a variety of bi products such as specialty chemicals, lumber, timber. The company also and is involved in land development. It has Plants worldwide in such places as Brazil, Czechoslovakia and the U.S. However, its primary marketplace was in the U.S and 24 percent of its other customers were from other countries. Eastvaco produced a substantial amount of products at the Charlotte facility. In order to The Charlotte Plant had the capability to output a large amount and variation of products and thus had full support of Eastvaco. This gave them the ability to access money to support their green operation. This plant was quiet productive and had an annual production capacity of 3,143,000 tons which progressively increased. Another major strength was that Eastvaco owned most of their plants and other facilities and thus had hardly any liabilities Eastvaco Go green Campaign was admirable to both customers and the general public. It was one of the major aspects of the company that set it apart from the competition. In reviewing the Charlotte facility financial data, it was apparent that in 2007-2008 the company had a surplus of inventory that was not sold, which could be indicative of over production and need to reassess market demand. Charlotte?s retained profits had also dipped. Looking back it was noted that this had been happening for some time (2005). This resulted in the Plant needing more monetary support to support operations. This was an obvious weakness for the Charlotte plant as this chronic issue persisted for years. Decision makers should have recognized and implemented changes. The plant became more expensive to run; there was a surplus of inventory and thus obvious poor forecast in sales which negatively affected the bottom-line. Losses in profit were over a million dollars. Eastvaco had great potential to correct their wrong and take advantage of new opportunities. Simply going back to the drawing board and examining how much they are spending on operations and production, comparing it to sale trends over the last ten years, will likely put them in the position to get a realistic picture of their weaknesses and give them a stronger footing in the market place as they increase their bottom line. With monthly assessment of their financial reports Eastvaco will make real recognize and remedy mistakes before it hurts them. It appears that Eastvaco is satisfactorily meeting the Needs of their US market and thus should look further into permeating the international marketplace further. Eastvaco has proven itself to be quiet innovative as evidence by the variation and marketability of the goods it produces. It would be smart for the company to align themselves with international buyers where they have established concrete contracts. .This would enable them to know what their costs of operations and demands will be. More importantly they can sell the excess inventory and start to reeling in the profits The threats that the Charlotte Facility will have to consider is the chronic decline in returns, excess in inventory and increased expenses on the plant. In addition to poor financial and inventory management, Charlotte plant has been involved in quiet a few litigations. This not only impacted their image but put them in a position to be responsible for any environmental hazards or damages to communities in the proximity of their plant Financial vs. Managerial Accounting: Terry Thompson, the treasure, has a dilemma, two of his supervisors are leaving, Jeff, supervisor of the management accounting function and Fred, supervisor of the financial accounting department. Terry?s background is finance and has only a basic understanding of accounting. He comes to you and asks, ?I need to either hire someone from the outside or promote internally. What qualifications should I seek in each of the positions and what role do these positions play in strategic planning?? Required: 1. Answer each of the two questions asked by Terry. Your answer should be in the form of a well prepared memo. Memo To: Terry Thompson From: Ramone Reid- Felix Date: 9/13/2011 Re: Hiring Management and Financial Accountants Message Dear Mr. Thompson, You department has lost two essential employees at the same time and I understand your urgency to find the right persons to replace them. You wanted to know what qualifications you should seek in each of the positions and what role do these positions play in strategic planning? Though both areas are complimentary, there job requirements and functions are quite different. Financial Accountant is usually responsible for Contributing to the development and implementation of the departmental accounting systems, procedures and policies. Financial account is required to: ? Be capable of supporting the company through the collection, processing, recording, reconciliation and reporting of financial data. This is inclusive of basic reporting requirements of profitability, liquidity, solvency and stability. ? Have Financial reports be readily accessible to internal and external person such as banks, creditors and shareholders. ? Be highly organized with a proven track record of accounting managerial duties. Management accountant plays a more internal role within the organization. This person is required to supply both managers and non managers with financial and non financial information to enable associates to make more informed and sound decisions by not only with current information but management accounting forecasts. By this means associates can be more strategic in attaining organizational goals. Management Accountant is required to : ? Produce timely and reliable management information reports on a monthly basis. ? Investigate variances against budgets and provide analysis of differences. ? Assist in the preparation of annual budgets and cash flow forecasts. ? Have monthly meetings with management to discuss organizational budgetary status and help with implementing corrective measures if necessary ? Ensure that accounts are effectively managed. This person should have demonstrable experience of working in management accounting or financial management and have good knowledge of budgeting and forecasting issues and techniques. Reports generated by this person will be used exclusively for executive management. Statistical tools are used to generate more accurate and readable data which gives clear monetary figures which enables easier decision making. Strategically, both accountants should be able to work independently and collaboratively with the team and each other to create crystal clear insight into the company?s financial status. Attaining the most optimal financial outcome is key, but intercepting the slightest financial weaknesses is even more critical. If you need further advice and assistance in choosing the right candidate, do not hesitate to let me know. Regards Ramone Reid-Felix 2. In your own words, what is the difference between a financial and managerial accountant? A Financial Accountant produces statements for both internal and external reviews by shareholders, creditors and the government. Financial accounting primarily focuses on the past and does historical evaluations of a company?s performance. Reports generated have to be meticulously done to say the least, and be accurate. Whereas, a Management Accountant does more internal financial reports that are generated exclusively for executive management and employees. The data supplied is conclusive findings of accounting and other relevant statistics that enables both management and employees to understand the financial standing of the organization as well as use that data to provide a departmental and generalized look at how the company is performing. It focuses on forward moving analysis and forecasts such as implementation of budgets based on financial reports. .,ok


Paper#1006 | Written in 18-Jul-2015

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