Pleasanton Studios Kersten Brown, the CEO of Pleasanton Studios, is having a tough week – all three of her top management level employees have dropped in with problems. One executive is making questionable decisions, another is threatening to quit, and the third is reporting losses (again). Kersten is hoping to find simple answers to all her difficulties. She is asking you (her accountant) for some advice on how to proceed. Pleasanton Studios owns and operates three decentralized divisions: Entertainment, Streaming, and Parks. Pleasanton Studios has a decentralized organizational structure, where each division is run as an investment center. Division managers meet with the CEO at least once annually to review their performance, where each division manager’s performance is measured by their division’s return on investment (ROI). The division manager then receives a bonus equal to 10% of their base salary for every ROI percentage point above the cost of capital. The Entertainment division manager, John Freeman, was the first to knock on Kersten’s door this morning. Entertainment, Pleasanton Studios’ first endeavor, produces movies for the big screen. Entertainment has been in operation since 1965. Last month, John had mentioned a proposal to build a new animation studio. The build would cost $4,910,000 with an estimated life of 20 years and no salvage value and would allow Entertainment to start producing animated movies. Animated movies were projected to bring in an additional $1,210,000 in revenues each year, but would increase annual production costs by $574,000. John had dropped in to let Kersten know he had decided not to move forward with the animation studio. This surprised Kersten – her quick mental calculation indicated that the studio would have a payback period of 8 years, much shorter than the expected life of the studio. Not entirely sure that her quick assessment was valid, Kersten needed to check with her accountant on the matter. Next to Kersten’s door was the manager of Streaming, which produces short-form (30 minute to one hour) episodes in addition to streaming the movies developed by Entertainment. Customers then buy subscriptions to the service. Run by division manager Reyna Imanah, Streaming was introduced in 2016 and has increased subscriptions by 20% every year since. Reyna’s complaint was that, based on the current bonus payout schedule, John Freeman’s bonus last year was significantly higher than hers. She points to the increasing subscription rates at Streaming, and says that her division is being punished for having opened so recently (her division’s facilities are much more recent than those in Entertainment). She currently has an employment offer from another company at the same base pay rate, and stated that she will accept this offer unless she feels her performance is being appropriately acknowledged and compensated. Kersten needs to look at the relative performance across divisions to determine how to proceed with Reyna. Pleasanton Parks is a theme park based on the movies from Entertainment and the series from Streaming. For many years, it was a popular year-round destination, with characters, rides, and a hotel. This park has lost popularity in recent years, and has been ‘in the red’ for the past two years. If the park is not profitable this year, you will need to decide whether to permanently close that division. Included in the ‘Fixed COGS’ for Parks is an annual $1,650,000 mortgage payment on the land and buildings for the park, which would still need to be paid (as a corporate level cost) if the park is closed and that segment is removed from the financial statements. Incidentally, you recently had a conversation with a Marriott Hotels executive, who would like to expand into the area. If you decided to close Parks, you are fairly certain that you could lease the hotel facilities to Marriott for $650,000 annually. A partial report of this year’s financial results for Pleasanton Studios can be found in Table 1 below. The ‘Selling and admin costs’ listed in Table 1 are directly incurred by each division, and are determined at the beginning of each year (that is, they do not change with increased/decreased production). In addition to the divisional information above, there are $2,000,000 in corporate costs that are currently allocated evenly between the three divisions. These costs are primarily due to employee benefits costs, which are billed at the corporate level. If the Parks division is closed, the decreased employee base would reduce allocated corporate costs by $500,000. Pleasanton Studios has a cost of capital of 12 percent (and Kersten uses the cost of capital as their required rate of return) and are subject to 32% income taxes. Before she can make any decisions, Kersten needs to evaluate this year’s performance results. She sets off to see you, the company’s accountant, for answers.

Required: Write your response in the form of a 1-2 page memo to Kersten Brown, from the perspective of the company accountant. Be sure to include all the financial analyses to support your conclusions, clearly showing your calculations, at the end of the memo or attached in a separate document. Be sure to address the following points in your memo.

a. Evaluate this year’s performance results for the three divisions. Your financial analysis should include a segmented income statement for Pleasanton Studios, as well as the current annual ROI, residual income and EVA for the three divisions.

b. Evaluate Entertainment’s decision not to invest in the new animation studio (i.e., was the decision appropriate and in the best interests of Pleasanton Studios), including the appropriate financial analyses to support your evaluation.

c. Evaluate the validity of Reyna Imanah’s complaint regarding her evaluated performance. Explain why it is (or is not valid), and what further information would be necessary.

d. Provide a recommendation on whether to close the Parks division, including all necessary financial analyses.

According to the WHO MONICA Project the mean systolic blood pressure for people in China is 128 mmHg with a standard deviation of 23 mmHg (Kuulasmaa, Hense & Tolonen, 1998). Systolic blood pressure is normally distributed. a.) TRUE or FALSE: The random variable is defined as systolic blood pressure of a person in China. b.) For a sample of size 15, state the mean of the sample mean. c.) For a sample of size 15, state the standard deviation of the sample mean (the "standard error of the mean"). d.) Suppose a sample of size 15 is taken. Find the probability that the sample mean systolic blood pressure is more than 135 mmHg.

.

b) Suppose there is a group of individuals on which you have individual-level data. Suppose, for those with wages below some level ˜w, a policy is implemented to have them work more. You have in your data hours worked, several individual characteristics, the wages, and year. The policy is implemented in the year 2000, and you have data for the year 1998 and 2002.

What type of estimation strategy would you use to determine the effect of the policy? What is it called? Write the specific regression specification you would use; make sure to explicitly indicate what you would use as control variables.

Assume you invest $2000 on February 1, 1993, $2000 on February 1, 1994, $2000 on February 1, 1995,   $2000 on February 1, 1996, $2000 on February 1, 1997, $2000 on February 1, 1998, $0 on February 1, 1999,  $0 on February 1, 2000, $0 on February 1, 2001,   $0 on February 1, 2002, and $0 on February 1, 2003.  What is the value of those investments on  February 1, 2003?  Assume that any money that is invested will earn an interest rate of 10%, compounded annually.

a. 15,431

b. 22,593

c. 37,062

d. 24,852

e. 49,045

Create a timeline outlining the discovery (or invention) of World's first solar power station opened in France (1969 Energy)

Directions:

What is the Invention or Discovery about?

What category does the Invention fall into? detail (Entertainment, Computers, Household, Transportation, Energy, Other)

When was it invented?

Who Invented It?

What does it do?

What was the purpose for the research that led to the invention or discovery? Why do it?

How did the invention either make life easier or affect the world in a positive or negative way?

Jose and Emily work as auditors for the state of Texas. They have been assigned to the audit of the Lone Star School District. There have been some problems with audit documentation for the travel and entertainment reimbursement claims of the manager of the school district. The manager knows about the concerns of Jose and Emily, and he approaches them about the matter. The following Conversations takes place:

Manager: Listen, I've requested the documentation you asked for, but the hotel says it's no longer in its system.

Jose: Don't you have the credit card receipt or credit card statement?

Manager: I paid cash.

Jose: What about a copy of the hotel bill?

Manager: I threw it out.

Emily: That's a problem. We have to document all your travel and entertainment expenses for the city manager's office.

Manager: Well, I can't produce documents that the hotel can't find. What do you want me to do?

Questions: Multiple Choice

The manager seems to be failing in regard to which Pillar of Character?

A. Caring

B. Respect

C. Responsibility

D. Fairness

If Jose and Emily decide to report this incident to the school, they would be operating under which Pillar of Character?

A. Caring

B. Respect

C. Responsibility

D. Fairness

Listed below are several transactions that took place during the second and third years of operations for RPG Company. Year 2 Year 3 Amounts billed to customers for services rendered $ 370,000 $ 470,000 Cash collected from credit customers 280,000 420,000 Cash disbursements: Payment of rent 82,000 0 Salaries paid to employees for services rendered during the year 142,000 162,000 Travel and entertainment 32,000 42,000 Advertising 16,000 37,000 In addition, you learn that the company incurred advertising costs of $27,000 in year 2, owed the advertising agency $5,200 at the end of year 1, and there were no liabilities at the end of year 3. Also, there were no anticipated bad debts on receivables, and the rent payment was for a two-year period, year 2 and year 3. Required: 1. Calculate accrual net income for both years. 2. Determine the amount due the advertising agency that would be shown as a liability on RPG’s balance sheet at the end of year 2. Calculate accrual net income for both years. Question 1 Year 2 Year 3 Revenues Expenses: Rent Salaries Travel and entertainment Advertising Net income Question 2 Determine the amount due the advertising agency that would be shown as a liability on RPG’s balance sheet at the end of year 2.

8. The Smart CPA firm held an End of Tax Season party. The company expected attendance of 75 people and prepared the following budget:

Hotel room rental $600
Food 1,000
Entertainment 750
Decorations 250
Total Costs $2,600

Seventy five people attended the party. The following costs were incurred:

Hotel room rental $600
Food 1,150
Entertainment 750
Decorations 350
Total Costs $2,850

What is the variance for total costs?
A) $300 Unfavorable
B) $300 Favorable
C) $250 Favorable
D) $250 Unfavorable

9. The various stages through which a product passes are called the ________.
A) product life cycle
B) value chain
C) performance plan
D) product performance plan

10. Research and development is the function of a value chain that involves ________.
A) the detailed design and engineering of products, services or processes
B) the generation of ideas related to new products only
C) the generation of ideas related to new products, services or processes
D) the detailed design and engineering of new processes

11. Which of the following is a major factor causing changes in management accounting today?
A) additional value chain functions
B) small advances in technology
C) increased global competition
D) shift to manufacturing-based economy