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    16.4 Melior Health's Key Performance Measures A)

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    16.4 Melior Health's Key Performance Measures A)

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    16.4 Melior Health's Key Performance Measures A)

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    of 4

    Carey & Knowles: Accounting - A Smart Approach

    Chapter 16 - Performance Measurement


    Solutions to practice questions

    Note: Higher level questions are marked with an asterisk*

    *16.4 Melior Health’s key performance measures

    a)

    Melior data

    South East South West Midlands

    Operating profit to 8.3% 3.0% 4.6%

    revenue %

    Total operating £2,970 £1,393 £1,385

    profit per bed

    Revenue per £227,368 £121,905 £256,842

    member of staff

    Ratio of medical 63% 57% 37%

    staff : total staff

    The South East hospital is out-performing both the South West and Midlands hospitals, in

    terms of operating profit. This is shown by both the percentage of operating profit to sales,

    and the operating profit per bed.

    A comparison of the South West to the other two hospitals suggests that the reason for

    poor performance in the South West could be due to high staff levels, as the revenue per

    staff member is significantly lower than the other two.

    On the other hand, the Midlands hospital is only achieving a slightly better performance in

    operating profit than the South West. This could be due to the low ratio of medical staff to

    © Oxford University Press, 2020. All rights reserved.


    Carey & Knowles: Accounting - A Smart Approach
    Chapter 16 - Performance Measurement
    Solutions to practice questions

    total staff. A review of the tasks carried out by non-medical staff may suggest where

    efficiency improvements could be made.

    b) Other key performance measures could include bed occupancy levels, waiting times for

    appointments, patient satisfaction levels, cleanliness, number of operations per surgeon,

    or staff turnover.

    16.5 Bakewell

    Supermarkets Health food shops Café

    £ £ £

    Gross revenue 1,250,000 18,800 34,450

    Discount 250,000 940 0

    Net revenue 1,000,000 17,860 34,450

    Cost of sales 650,000 9,200 6,890

    Gross profit 350,000 8,660 27,560

    Bad debts 0 357 1,723

    Delivery costs 15,625 3,750 2,344

    Contribution 334,375 4,553 23,494

    Contribution per 0.07 0.11 0.44


    cake

    16.6 Bakewell balanced scorecard

    This will largely depend on students’ individual strategies but a suggested solution could
    include the following:

    © Oxford University Press, 2020. All rights reserved.


    Carey & Knowles: Accounting - A Smart Approach
    Chapter 16 - Performance Measurement
    Solutions to practice questions

    Financial

    Objective Measure

    Improve ROCE ROCE %

    Cost per cake


    Cut costs compared to previous
    year

    Customer Internal processes

    Objective Measure Objective Measure

    Average price per % number of


    Set supermarket
    cake compared to Improve wastage reject cakes to
    prices competitively
    competitors total cakes

    % market share in Cakes produced


    Increase market
    health food market Improve production per hour,
    share of health food
    compared to line efficiency compared to
    cakes
    previous year previous year

    Learning and growth

    Objective Measure

    Number of employees
    Improve health and
    attending training
    safety training
    courses

    Ensure the workforce


    Staff turnover
    is satisfied

    *16.3 Jabu

    Jabu’s customer profitability data

    Supermarkets rand ’000 Corner shops rand ’000

    © Oxford University Press, 2020. All rights reserved.


    Carey & Knowles: Accounting - A Smart Approach
    Chapter 16 - Performance Measurement
    Solutions to practice questions

    Gross revenue 324.0 189.0

    (270 x 1,200/1,000)

    Discount 97.2 –

    Manufacturing cost 129.6 75.6

    (108 x 1,200/1,000)

    In-store promotion 40.0 nil

    Cost of customer visits 18.0 72.0

    (3 x 6,000/1,000)

    Bad debts – 9.5

    Delivery cost per 31.25 45.0

    annum (100 x 1.25 x 250/1,000)

    Total profit 7.95 (13.1)

    Jabu should discontinue his business with the corner shops or renegotiate his prices

    unless he can make operational savings elsewhere. If the corner shops are not prepared

    for a price increase, then Jabu should consider reducing the number of customer visits

    and having fewer deliveries with larger quantities of boxes of sweets. Customer visits to

    corner shops are costing 103 rand per box compared to 15 rand per box for the

    supermarkets. The delivery cost per box of sweets to the corner shops is 64 rand,

    compared to 26 rand for the supermarkets.

    © Oxford University Press, 2020. All rights reserved.

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