In the last decade, tens of thousands of IS/MIS jobs in the United States have been outsourced to India, as well as other countries. The three leading Indian outsourcing firms (Wipro, Infosys, and Tata) are growing at about 10% annually, and currently employ about 300,000 IS/IT workers in India, most of whom are working on outsourced projects from the United States, and Europe.
Large American global technology firms like Cisco, Microsoft, and IBM have made significant investments in India. IBM has created seven centers in India, and employs over 150,000 Indian
workers in 2012. Microsoft has over 5000 employees in India working on products at all stages of the lifecycle from research and development, to support services. Cisco has 7,000 employees in India. Accenture, one of the world’s largest IT and business consulting firms which has a large and growing practice called “business process outsourcing” and “management outsourcing,” has over 74,000 employees in India working diligently to encourage firms around the world to outsource to India, or other low-wage countries. At the same time, large outsourcing firms like Wipro and Tata send over 100,000 IS workers to the U.S. every year.
There are many reasons that outsourcing to India and other areas has grown so rapidly. Labor costs in India are 10%-20% of labor costs in the U.S. A $60,000 a year programmer in the United States can be employed in India in 2013 for about $8,000-$10,000, and that programmer will live comfortably. Second, the Internet has made it possible and inexpensive to coordinate and manage far flung teams of employees. Third, Indian infrastructure has improved to the point where it can support global business operations (although there are exceptions). Fourth, India and China with 1 billion+ populations and nearly 8% annual GDP growth rates represent significant investment opportunities for American and other global firms. Most investments in China are not made for their outsourcing potential, but for the chance to participate in the growth of China’s domestic and export markets. In their own right, India and China are the economies which will grow twice as fast as the U.S. economy in the next decade assuming existing trends continue.
All of this outsourcing would seem to paint a dim picture for IS/MIS careers in the United States.
One would expect thousands of IS/MIS workers out of a job, and investment in systems shrinking. Oddly, after a decade of significant outsourcing, unemployment among American IS/MIS workers is half that of the labor force average of 7.6 % in 2013, and is lower than unemployment among all college graduates and professionals of similar educational levels (about 3.7%). The estimated unemployment rate among IS/IT/MIS workers is less than 3.2%. Whatever the impacts of outsourcing, it clearly has not led to widespread unemployment among U.S. IS workers. Why not? Oddly, despite all the outsourcing of IT work, investment by U.S. businesses in information technology and systems has expanded in the last decade at an extraordinary rate of about 5% annually (more than twice the rate of growth of the economy as a whole).Investment in information technology, systems, hardware, software and telecommunications equipment was $540 billion in 2012, 52% of all capital investment in the U.S., and up from $366 billion in 1998 (Bureau of Economic Analysis, 2013). Employment levels in the IS/MIS careers and occupations have also expanded in the U.S. over the last decade at about 5% annually. How is it possible that IS/MIS outsourcing can be proceeding at a very rapid rate, and growth in IS/MIS careers and investments is expanding? The answers are speculative. One possible answer is that outsourcing has largely involved lower level, technical programming and engineering jobs and not higher level, high value-added jobs. As lower level jobs are outsourced, more higher value jobs replace them. Moreover the demand in the U.S. for technical programming jobs has exceeded the supply, leaving plenty of work for local U.S. technical personnel. Some jobs like technical support specialist cannot be easily outsourced. Higher level management jobs are much less likely to be outsourced because of the need for face-to-face interaction with suppliers, customers, and employees. Sales and marketing are difficult to outsource. Another possible explanation is that the growth of outsourcing has potentially lowered the costs of system development in the U.S., making systems less expensive to build, and therefore encouraging U.S. firms to invest more in IT/IS and systems in general. The cost of technology has also fallen significantly (in terms of cost/millions of instructions per second). These developments are the equivalent of lowering the price of capital (in this case IT capital). And high levels of IS investment in the U.S. have only encouraged more outsourcing (as well as domestic employment). One result is a virtuous circle: outsourcing leads to lower system development costs, which leads to more investments in systems, which leads to higher demands for skilled IS/MIS labor, some of which will be outsourced. There are of course brakes and limits on the outsourcing process which are beyond the scope of this paper.
(a) Why outsourcing to India and other areas has grown so rapidly?
(b) How is it possible that IS/MIS outsourcing can be proceeding at a very rapid rate, and growth in IS/MIS careers and investments?
(c) How has IS/MIS outsourcing impacts employment?
In: Accounting
The following table shows the number of people, in thousands, in the United States with and without health insurance in 2015. They are categorized by their household incomes.
a. What percentage of the U.S. population in 2015 did not have health insurance?
b. What percentage of the U.S. population in 2015 lived in households earning $100,000 or more?
c. What percentage of the U.S. population in 2015 did not have health insurance and lived in households earning less than $25,000?
d. What percentage of the U.S. population in 2015 did not have health insurance or lived in households earning less than $25,000?
e. What percentage of the U.S. population in 2015 did not have health insurance, given they lived in a household earning less than $25,000?
f. What percentage of the U.S. population in 2015 lived in a household earning less than $25,000, given they did not have health insurance?
| Household Income | Insured | Uninsured | |
| Less than $25,000 | 52989 | 7833 | |
| $25,000 to $49,999 | 64279 | 8263 | |
| $50,000 to $74,999 | 58121 | 5542 | |
| $75,000 to $99,999 | 42303 | 3530 | |
| $100,000 or more | 106372 | 4482 | |
In: Statistics and Probability
Southwest Airlines provides scheduled air transportation services in the United States. Like many airlines, South-west leases many of its planes from Boeing Company. In its long-term debt disclosure note included in the financial statements for the year ended December 31, 2015, the company listed $324 million in lease obligations. The existing leases had an approximate ten-year remaining life and future lease payments average approximately $45 million per year.
Required:
1. Determine the effective interest rate the company used to determine the lease liability assuming that lease payments are made at the end of each fiscal year.
2. Repeat requirement 1 assuming that lease payments are made at the beginning of each fiscal year.
In: Accounting
Money-Back Guarantee, No Questions Asked
TradeSmart Inc. operates 1,200 discount electronics stores throughout the United States. TradeSmart has been quite successful in a highly competitive industry, primarily because it has been able to offer brand-name products at prices lower than can be found at other discount outlets. Because of its size, TradeSmart can purchase bulk inventory directly from manufacturers, and the economies of scale it derives from such purchases can be passed on to consumers in the form of lower prices.
In addition to low prices, TradeSmart offers an extremely liberal product return policy. Customers are permitted to return products for virtually any reason and with little regard to the time period covered by manufacturers’ warranties. In fact, just a few days ago, a customer returned a digital pager that was more than two years old. TradeSmart gave the customer a full refund, even though the pager appeared to have been run over by a car, which, if true, clearly would have voided the manufacturer’s warranty. In another instance, a customer was given a refund when he returned the camcorder he had purchased three days earlier to record his daughter’s wedding festivities. The customer could not describe the camcorder’s malfunction—he said “it just didn’t work right.” The customer refused an offer to replace the camcorder; instead, he insisted on a full refund, which he was given.
The manager of the customer relations department suspected that the customer had “purchased” the camcorder intending all along to return it after his daughter’s wedding, but TradeSmart’s return policy does not dissuade customers from this practice. According to Ed Davidson, vice president of customer relations, TradeSmart is willing to stand behind every product it sells, regardless of the problem, because the company believes such a policy is needed to attract and keep loyal customers in such a competitive industry. The company’s motto—“Customer Satisfaction Is Our Business”—is displayed prominently throughout TradeSmart stores.
With such a liberal return policy, how does TradeSmart keep its prices so low? Actually, TradeSmart ships the returned products back to the manufacturers as defective products, so the return costs are passed on to the manufacturers. According to the manufacturers, only one out of every six products returned by TradeSmart actually is defective. But when the manufacturers complain about such returns as used products or products that have no mechanical problems, TradeSmart reminds them that the company does not have a service department, so its personnel are not knowledgeable concerning the technical circuitry of the products—the products are returned to the manufacturers with the customers’ complaints attached. TradeSmart’s inventory manager would contend that the company does not intentionally deceive or take advantage of the manufacturers’ return policies and warranties.
Do you agree with TradeSmart’s return policy? Is it ethical? What action would you take if you were one of TradeSmart’s suppliers?
In: Finance
12.3 Fit Apparel
Fit Apparel (FA) sells high-quality workout clothing across Canada and the United States. FA is a private company owned by two sisters, Trina and Cora Smith. Ten years ago, the sisters decided to turn their lives around and get healthy. This involved a strict eating plan and an even stricter workout regimen. One thing that they both found motivating was feeling good at the gym, including wearing stylish clothes. The sisters decided to begin manufacturing and selling premium-priced workout apparel to both men and women. After many bumps along the road, 10 years later FA operates as a successful and extremely profitable business.
Fit Apparel doesn’t have physical stores. You must purchase the clothing from an independent consultant. The independent consultants are experts on the product and are very passionate about what they do. It is the role of the independent consultant to market the product. The most common way that this is done is usually by hosting in-home parties. The consultant will visit a customer’s home, and showcase the top-selling apparel items to a group of friends. There are many diff erent incentives for the consultants, which make their job very lucrative; over 80% of the consultants earn more than $130,000 per year. FA has been clear with the independent consultants that the company will never directly compete with them for sales.
The clothing is of premium quality and is priced at a premium amount. The top-selling products include hooded sweatshirts and workout tops, pants, and shorts. Other items that broaden the product range include items such as water bottles, body wash, and running shoes.
A typical customer of FA is a woman between the ages of 25 and 45. She loves to be outdoors and loves to exercise. Being healthy is important to her and she is at peace with herself. She has always felt the need to belong in group settings and loves to shop.
All clothing is priced at total cost plus 60%. The pricing is very high and makes the products “exclusive.” Not everyone can afford to be part of the FA “club.” No item ever goes on sale. If a product doesn’t sell, it goes to waste.
The two sisters have attributed their success to finding a way to make people feel good about themselves. If something makes a person feel good, they are often willing to pay more money. The FA manufacturing plant currently has the capacity to use about 5 million machine hours. It is currently using about 3 million machine hours.
FA has been approached by a well-recognized national charity that supports women’s health. The charity has asked FA to manufacture 1 million cycling jerseys for its annual cycling event. The event requires each participant to raise $2,000 in order to be eligible to ride their bike from one destination to another. Each participant must also purchase the cycling jersey. The charity has suggested that each participant will pay $30 for a jersey. This represents a fraction of the retail selling price of $75 (see Exhibit 1). Although FA currently manufactures cycling jerseys, the sisters are not sure if they should accept this offer. In order to manufacture the jerseys, FA would have to purchase a screen print machine that would cost $200,000 and incur $25,000 of set-up costs. Because of the screen printing, these custom jerseys would require an additional 0.25 labour hours and 0.5 machine hours each.
Required
The sisters decided they needed the help of an expert and have engaged you, a professional accountant, for advice. They have provided you with the current cost to manufacture a similar jersey (Exhibit 1). They have asked you to prepare a report that outlines whether or not they should accept this one-time order. They would like you to consider both qualitative and quantitative factors. Prepare the report for the owners of FA.
EXHIBIT 1 – CYCLING JERSEY COST INFORMATION (PER JERSEY, BASED ON 4 MILLION JERSEYS PRODUCED ANNUALLY)
|
Material |
$10.46 |
|
Direct labour: 0.5 hours @$12.15 per hour |
$6.08 |
|
Overhead—Variable: 0.75 machine hours @$7.10 per hour |
$5.33 |
|
Overhead—Fixed per jersey |
$7.00 |
|
Total costs |
$28.87 |
|
Markup |
$46.18 |
|
Selling price |
$75.00 |
In: Accounting
Instructions- Amount Coca-Cola Needs: $5,000 million to build four new manufacturing plants outside the United States; Interest rate: 5%, Tax Rate: 21%, Stock Price: $45.54 as of January 2,2018, Number of Shares Outstanding: 4255 million, EBIT: Pessimistic: $7,000 million, Realistic: $9,000 million, Optimistic: $11,000 million. We must develop a projected income statement and balanced sheet for Coca-Cola. Assume it needs to raise $1 billion to increase its market share, and plans to obtain 50% financing from a bank and 50% financing from a stock issuance. My question is for exercise 8C Determine the Cash Value of Coca-Cola. Step 1 is to calculate the financial wroth of Coca-Cola based on four approaches: (1) the net worth method, (2) the net income method, (3) the price-earnings ratio method, and (4) the outstanding shares method.
In: Finance
BUSINESS LAW CASE ANALYSIS.
Morales-Cruz v. University of Puerto Rico
United States Court of Appeals, First Circuit, 676 F.3d 220 (2012).
Background and Facts
In 2003, Myrta Morales-Cruz began a tenure-track teaching position at the University of Puerto Rico School of Law. During Morales-Cruz’s probationary period, one of her co-teachers in a law school clinic had an affair with one of their students, and it resulted in a pregnancy. In 2008, Morales-Cruz wanted the university’s administrative committee to approve a one-year extension for her tenure review. The law school’s dean asked Morales-Cruz about her co-teacher's affair and criticized her for failing to report it. He later recommended granting the extension but called Morales-Cruz insecure, immature, and fragile. Similarly, a law school committee recommended granting the extension, but a dissenting professor commented that Morales-Cruz had shown poor judgment, in regard to the co-teacher's affair, had personality flaws, and had trouble with complex and sensitive situations.
Morales-Cruz learned about these comments and complained in writing to the university’s chancellor. As a result, the dean then recommended denying the one-year extension, and the administrative committee ultimately did just that. When her employment was terminated, Morales-Cruz sued the university under Title VII. Among other things, she asserted that the dean had retaliated against her for complaining to the chancellor. The district court found that Morales-Cruz had not stated a proper retaliation claim under Title VII.
In the Words of the Court …
SELYA, Circuit Judge.
* * * *
The amended complaint alleges that various officials described the plaintiff as “fragile,” “immature,” “unable to handle complex and sensitive issues,” * * * and exhibiting “lack of judgment.” These descriptors are admittedly unflattering—but they are without exception gender-neutral. All of them apply equally to persons of either gender * * * .
* * * *
* * * Title VII makes it unlawful for an employer to take materially adverse action against an employee “because he has opposed any practice made an unlawful employment practice by this subchapter.” To state a cause of action under this portion of the statute, the pleading must contain plausible allegations indicating that the plaintiff opposed a practice prohibited by Title VII and suffered an adverse employment action as a result of that opposition. [Emphasis added.]
The plaintiff alleges that she was retaliated against for writing to the Chancellor to complain about the “discriminatory” comments made in the course of her request for an extension. In support of this allegation, she points out that after she sent her letter the Dean reversed his position on her extension. This construct suffers from a fatal flaw: her factual allegations do not support a reasonable inference that she was engaging in protected conduct when she opposed the remarks made.
* * * The facts alleged * * * provide no reasonable basis for inferring that the comments cited reflected gender-based discrimination. Those comments were unarguably gender-neutral and do not afford an objectively reasonable foundation for a retaliation action.
Decision and Remedy
The U.S. Court of Appeals for the First Circuit held that Morales-Cruz could not bring a retaliation claim under Title VII. It therefore affirmed the district court’s judgment for the University of Puerto Rico.
The Ethical Dimension
Could Morales-Cruz’s dean have had legitimate reasons for changing his mind about the one-year extension? If so, what might they have been?
The Legal Environment Dimension
What steps should employers take to reduce the likelihood that supervisors will retaliate against employees who make or support discrimination claims?
Harassment by Co-Workers and Nonemployees
When the harassment of co-workers, rather than supervisors, creates a hostile working environment, an employee may still have a cause of action against the employer. Normally, though, the employer will be held liable only if the employer knew, or should have known, about the harassment and failed to take immediate remedial action.
Occasionally, a court may also hold an employer liable for harassment by nonemployees if the employer knew about the harassment and failed to take corrective action.
1. What is the legal issue of the case?
2. How did the court decide on the issues?
3. What reasoning did the court use to substantiate their findings?
4. Do you agree or disagree with how the finding by the court in this matter? and why?
In: Operations Management
Education. Post-secondary educational institutions in the United States (trade schools, colleges, universities, etc.) traditionally offer four different types of degrees or certificates. The U.S. Department of Education recorded the highest degree granted by each of these institutions in the year 2003. The percentages are shown in the table below. A random sample of 225 institutions was taken in 2013 and the number of institutions in the sample for each category is also shown in the table. Conduct a hypothesis test to determine whether there has been any change from the percentages reported in 2003. Round all calculated values to four decimal places.
| Highest Degree Awarded | Population percentages in 2003 | Sample counts in 2013 |
| Certificate | 35.0% | 80 |
| Associates | 26.6% | 54 |
| Bachelor's | 11.3% | 28 |
| Graduate | 27.1% | 63 |
a. Enter the expected values for the hypothesis test in the table below.
| Highest Degree Awarded | Expected value |
| Certificate | |
| Associates | |
| Bachelor's | |
| Graduate |
b. Calculate the test statistic for this hypothesis test. ? z t X^2 F =
c. Calculate the degrees of freedom for this hypothesis test.
d. Calculate the p-value for this hypothesis test. p-value =
e. Based on the p-value, we have:
A. little evidence
B. strong evidence
C. very strong evidence
D. some evidence
E. extremely strong evidence
that the null model is not a good fit for our observed data.
In: Math
Education. Post-secondary educational institutions in the United States (trade schools, colleges, universities, etc.) traditionally offer four different types of degrees or certificates. The U.S. Department of Education recorded the highest degree granted by each of these institutions in the year 2003. The percentages are shown in the table below. A random sample of 300 institutions was taken in 2013 and the number of institutions in the sample for each category is also shown in the table. Conduct a hypothesis test to determine whether there has been any change from the percentages reported in 2003. Round all calculated values to four decimal places.
| Highest Degree Awarded | Population percentages in 2003 | Sample counts in 2013 |
| Certificate | 35.0% | 107 |
| Associates | 26.6% | 72 |
| Bachelor's | 11.3% | 37 |
| Graduate | 27.1% | 84 |
a. Enter the expected values for the hypothesis test in the table below.
| Highest Degree Awarded | Expected value |
| Certificate | |
| Associates | |
| Bachelor's | |
| Graduate |
b. Calculate the test statistic for this hypothesis test. ? z t X^2 F =
c. Calculate the degrees of freedom for this hypothesis test.
d. Calculate the p-value for this hypothesis test. p-value =
e. What is your conclusion using αα = 0.01?
A. Reject H0H0
B. Do not reject H0H0
In: Math
14. Cleaverland purchased 100% of Omaha on January 1, 2019 for $650,000. On that date, Omaha's stockholders' equity was $650,000, and the recognized book values of Ottowa’s individual net assets approximated their fair values. Omaha had net incomes of $150,000 and $190,000 for 2019 and 2020, respectively. The subsidiary paid dividends amounting to $30,000 in both years. Cleaverland uses the equity method to account for its pre-consolidation investment in Omaha.
What was the balance in Equity Investment at December 31, 2020?
a. $650,000
b. $710,000
c. $990,000
d. $930,000
15. Brendon, Inc. acquired 100% of Weston Enterprises on January 2, 2020. During 2020, Brendon sold Weston for $700,000 goods which had cost $500,000. Weston still owned 40% of the goods at the end of the year. In 2021, Brendon sold goods with a cost of $500,000 to Weston for $700,000, and the buyer still owned 40% of the goods at year-end. For 2021, cost of goods sold was $1,000,000 for Brendon and $990,000 for Weston.
What was consolidated cost of goods sold for 2021?
a. $1,370,000
b. $1,290,000
c. $1,870,000
d. $1,990,000
Clearwater Co. owned all of the voting common stock of Kelley, Inc. On January 2, 2020 Clearwater sold equipment to Kelley for $350,000. The equipment had cost Clearwater $425,000. At the time of the sale, the balance in accumulated depreciation was $125,000. The equipment had a remaining useful life of eight years and no salvage value.
16. For the consolidated balance sheet at December 31, 2021, at would amount would the equipment (net) be included?
a. $225,000
b. $262,500
c. $306,250
d. $-0-
On April 1, 2020, Republic Company sold equipment to its wholly owned subsidiary, Barre Corporation, for $40,000. At the time of the transfer, the asset had an original cost (to Republic) of $60,000 and accumulated depreciation of $25,000. The equipment has a five year estimated remaining life.Barre reported net income of $250,000, $270,000 and $310,000 in 2020, 2021, and 2022, respectively. Republic received dividends from Barre of $90,000, $105,000 and $120,000 for 2020, 2021, and 2022, respectively.
17. What was the amount of the gain or loss on the sale of equipment reported by Republic on its pre-consolidation income statement in 2020?
a. $-0-
b. $ 5,000 gain
c. $20,000 loss
d. $35,000 gain
18. What was the amount of the credit to depreciation expense on the 2021 consolidation worksheet?
a. $ 750
b. $-0-
c. $1,000
d. $1,600
In: Accounting