Case Study 2: A New Incentive System at Lane Automotive

You've been hired by Lane Automotive, a relatively large local automobile dealer to design a new compensation and incentive system for several positions that make up the bulk of the firm’s workforce. These positions are:

• 15 administrative positions: These positions involve the day-to-day operational facets of running the dealership—answering phones, working at the customer service desk, filing paperwork, pulling records on cars, and so forth. These employees are currently paid on an hourly basis. The turnover rate is about 35% for these positions. There have been several complaints about the courtesy and helpfulness of employees occupying these positions. Currently, these employees receive annual bonuses if the dealership exceeds its goals and merit pay increases once each year.
• 15 sales positions: The employees occupying these positions are primarily focused on selling cars and are paid entirely on commission. The turnover among these employees is high (about 80% leave each year), although a few of the sales staff have been with the dealership for a number of years.
• 17 service positions (mechanics): The mechanics occupying these positions are paid on a standard hour plan (i.e., their pay is based on how much time it should take to perform each repair). These employees regularly repair cars in less time than allowed under the standard hour plan. The turnover among these employees is very low. As in any other dealership, there have been some complaints about the quality of the service the firm’s mechanics have delivered. A number of customers have had to bring their vehicles in several times before their auto problems were properly repaired.

The goals of the dealership are primarily to make money on the sale of new and used cars, but most of the money is made through the service department. There are several challenges you must consider before you make your recommendations:

• The dealership’s profitability is fundamentally influenced by the number of cars service and the quality of that service. In addition, the dealership’s profitability is enhanced by (1) repeat business and (2) the company’s reputation. Historically, repeat customers represent a sizable amount of business; the dealership gets to sell their used cars they traded in and sells them new cars. Moreover, customer loyalty matters a lot because word-of-mouth advertising generates business.
• Service quality in terms of the sales process, as well as the service department (mechanics), is a critical component of customer satisfaction and affects the amount of repeat business.
• The income salespeople earn is directly related to the profitability of each car they sell. The prices on the cars are somewhat negotiable. Under the current system, the sales staff and the dealership split the profits from every transaction 50-50.

Questions

1. What are the major problems that exist in this case?
2. For each problem you have identified, explain how incentive may be a contributing factor to the problem or a solution to the problem.
3. What changes would you make to the incentive system in place for these three groups of employees?

Case Study Pink Lady Apple Orchard is a small family run orchard in Red Hill, Victoria. Jacinta and Pete own the property, which includes 50 hectares of apple plantings. As the market price of apples sold to supermarkets and fruit shops has decreased in the past few years, causing business to stagnate, Pete and Jacinta have decided to use some of their apple supply to produce their own range of apple based products. They have set up a small market stall at the orchard where they sell products directly to the public. They also have a regular stand at local markets. The number of customers is growing as word of mouth spreads. In an effort to further expand they have negotiated with a number of small retailers to stock their products. Recently they also employed a systems developer, who set up a website which enables them to market their products online and sell directly to the public. In a further effort to expand sales Jacinta organised to have their products advertised on a number of ‘shopping deal’ sites. Each site charged an upfront fee of $500.00. The Pink Lady Apple Orchard’s ‘deal was advertised throughout February. The orchard offered 30% off any sale made through the deal site. After deducting a further 5% commission on sales the ‘deal’ site passed the order and the payment onto the organisation. Jacinta then processed the order and delivered the products to the customer. Jacinta hoped that by offering this deal more customers would be attracted to their products. Jacinta and Pete have always delivered goods free of charge to their wholesale customers. However, with increased sales they are concerned about the increased courier charges. Pete has decided that by charging 15% delivery charge on each retail order he can recoup all the delivery charges. As Jacinta and Pete are already busy attending to the apple orchard they have employed Ruby, a local resident, two mornings a week (8 hours) to attend to all online orders. Although the number of orders is increasing, Jacinta is concerned that maybe not all products sell well enough to continue production. She has been experimenting with different flavours and products, including a new recipe for “Spicy Apple Chips”. Maybe she should change products or delete some products. She does not want unwanted stock accumulating in the storage sheds. She believes that the ‘special deals’ she has advertised for January/February will certainly help sales, but is concerned that she has made a bad decision with regard to profitability. QUESTION:at least two clear recommendations that Jacinta and Pete can adopt. These recommendations must be drawn from the analysis that you have carried out, and must have been discussed in the body of your report.

1. What evidence does Chesnut offer to support her allegation about interracial sexual relations between owners and enslaved women. What value judgements does she make? Why does she call slavery “ a monstrous system”?

Answers should contain material quoted from the document and/or the course textbook and provide analysis/explanation of how the quoted material supports your response.
Mary Boykin Chesnut, A Confederate Lady's Diary (1861)

I wonder if it be a sin to think slavery a curse to any land. Sumner said not one word of this hated institution which is not true. Men & women are punished when their masters & mistresses are brutes & not when they do wrong-& then we live surrounded by prostitutes. An abandoned woman is sent out of any decent house elsewhere. Who thinks any worse of a Negro or Mulatto woman for being a thing we can't name. God forgive us, but ours is a monstrous system & wrong & iniquity. Perhaps the rest of the world is as bad. This is only what I see: like the patriarchs of old, our men live all in one house with their wives & their concubines, & the Mulattos one sees in every family exactly resemble the white children-& every lady tells you who is the father of all the Mulatto children in everybody's household, but those in her own, she seems to think drop from the clouds or pretends so to think-. Good women we have, but they talk of nastiness tho they never do wrong; they talk day & night of -. My disgust sometimes is boiling over-but they are, I believe, in conduct the purest women God ever made. Thank God for my countrywomen-alas for the men! No worse than men everywhere, but the lower their mistresses, the more degraded they must be.

My mother-in-law told me when I was first married not to send my female servants in the street on errands. They were there tempted, led astray-& then she said placidly, "So they told me when I came here-& I was very particular, but you see with what result." Mr. Harris said it was so patriarchal. So it is-flocks & herds & slaves-& wife Leah does not suffice. Rachel must be added, if not married & all the time they seem to think themselves patterns-models of husbands & fathers.

Mrs. Davis told me "everybody described my husband's father as an odd character, a Millionaire who did nothing for his son whatever, left him to struggle with poverty," &c. I replied, "Mr. Chesnut Senior thinks himself the best of fathers-& his son thinks likewise. I have nothing to say-but it is true, he has no money but what he makes as a lawyer," &c. Again I say, my countrywomen are as pure as angels-tho surrounded by another race who are-the social evil!

Learning Objectives:

Identify taxable or nontaxable income, calculate taxable income, identify tax planning strategies

Background:

Sam and Ricci are a happily married young couple. They work hard and save diligently. Here comes the tax season and they plan on filing their joined tax report. They hope they can get some tax refund. They would also like to find out ways to save their tax payments in the future, so that they can raise children and prepare for their education fund.

Sam has a full-time job and makes $4,200 each month after taxes. He is also a teacher and last year he earn $700 out of a teaching job. Sam’s student loan balance is $22,000, he pays $250 each month. The interest payment he made on his student loan in last year is $1,800. Besides that Sam also has a car loan of $12,200 and credit card balance of $3,000. Sam’s withheld federal income tax is $10,000. (Let’s ignore state and local tax amount)

Ricci just graduated from college and has been working part time. Her workplace pays her $2,000 a month after taxes. Due to her excellent job performance and superior customer feedback, her boss gave her a total of $3,700 bonus last year. Her savings account has earned $20 in last year. Last year she graduated from her undergraduate program, and she paid $7,900 in tuition (she also qualified for the American Opportunity Credit). Ricci doesn’t have student loans. Ricci’s withheld federal income tax is $4,800. (Ignore state and local tax amount)

Sam and Ricci both have IRA accounts. Sam contributes $2000 a year and Ricci contributes $1000 to her account in each year. They bought a house a few years ago. Their mortgage payment per month is $1500. Last year, they made a total of $5,400 interest payment on their mortgage. Their property tax payment last year is $4,000

Your Tasks: (for calculations, You MUST show your work to earn credit)

1. Help the couple to calculate: (hint: some of the information provided may not be relevant to the tax report)

• Their total gross income
• AGI (adjusted gross income)
• Total Itemized deductions

2. If the standard deduction is $23,000 for their tax year, is the couple better off using the standard deduction or itemizing? Why?
3. What is the couple’s taxable income?
4. Suppose the income tax rate for their filing status is 20%, will they get tax refund or need to pay more tax that the amount withheld?
5. Is there anything that they could do to shield more of their income from taxes? Identify 2 to 3 tax planning strategies that are applicable to their situation.
6. Submit your work in WORD file to DropBox folder prior to its deadline.

All analysis should be done in MS Excel, and a memo to your boss explaining the situation, your

analysis, and conclusion should be prepared in MS Word. You must upload both files to be graded.

You will only get full credit for the assignment if your analysis is correct, all calculations and/or formulas

use cell references, and your memo has the right content, flows well, and is properly formatted, and

grammatically correct. An example of a good memo, and an Excel template is provided for your benefit.

You can add or delete columns in the excel template as needed.

Playtan Corporation has a machine that either should be repaired or should be replaced soon.

You have recently been hired by Playtan and one of your assignments is to help decide whether

replacing the machine, or repairing it is in the best interest of your company.

Investment required for repairing the machine is only $500,000 and cost to replace the machine

is $3,000,000. Repairing the machine will cut down on the number of returns from customers

and increase cash flows, while replacing the machine may increase the number of units sold.

Playtan has evaluated and calculated additional cash flows that will be generated under the two

scenarios over the next five years as follows:

Year

Cash flow (if repaired)

Cash Flow (if replaced)

1

197,000

1,613,000

2

160,000

1,185,000

3

178,000

978,100

4

139,000

997,800

5

117,000

990,000

Playtan does not accept projects that will pay back in more than 3 years, or any projects that will not

maximize shareholder wealth. So, you will need to use all capital budgeting techniques you’ve learnt in

your Finance class to ensure that the right option is chosen.

Cost of capital for the project (repair or replacement) could be anywhere from 8% to 14%, so you will

conduct your analyses at various weighted average cost of capital (WACC) or Required rate of return

points including at least five at 8%, 9%, 11%, 13%, and 14% for both scenarios, and also draw an NPV

profile for both situation using your calculations.

Use your knowledge of capital budgeting and time value of money to decide which of the options is better

for Playtan. All analysis must be done in Excel. Your excel model should be such that it can be used by

Playtan or any other corporation for similar capital budgeting situations – so anyone can change any

numbers and use the model again. This would require all calculations to be using cell references and excel

functions. You must write a memo to your boss, explaining the situation, your analysis, and your

conclusion. You must also explain the drawbacks of your technique/s if there are any.

Make sure that all your submissions have your full name, class, and section number included.

A major new client has requested your company to present an investment seminar to the municipal mayors of the represented Metros. As an investment specialist, you have been tasked to assist your company in preparing the presentation. To illustrate the common share valuation process, you have been asked to analyze Business Analytics, an employment agency that supplies word processor operators and computer programmers to businesses with temporarily heavy workloads. You are to answer the following:

2.1 Assume that Business Analytics has a beta coefficient of 1.2, that the risk-free rate ( the yield on T-bonds) is 3%, and that the required rate of return on the market is 8%. What is Business Analytic's required rate of return?

2.2 Assume that Business Analytics is a constant growth company whose last dividend (D0, which was paid yesterday) was R2.00 and whose dividend is expected to grow indefinitely at a 4% rate.

i. What is the company's expected dividend stream over the next 3 years?

ii. What is its current share price?

iii. What is the share's expected value 1 year from now?

2.3 now assume that the share is currently selling at R40.00. What is its expected rate of return?

2.4 What would the share price be if its dividends were expected to have zero growth?

2.5 Now assume that Business Analytics'dividend is expected to grow at 30% in the first year, 20% in the second year, 10% in the third year, and return to its long-run constant growth rate of 4%. What is the share's value under these conditions?

2.6 Suppose Business Analytics' is expected to experience zero growth during the first 3 years and then resume its steady-state growth of 4% in the fourth year. What would be its value then?

2.7 Finally, assume that Business Analytics' earnings and dividends are expected to decline at a constant rate of 4% per year, that is, g=-4%. Why would anyone be willing to buy such a share, and at what price should it sell?

2.8 suppose Business Analytics' embarked on an aggressive expansion that requires additional capital. Management decided to finance the expansion by borrowing R40 million and by halting dividend payments to increase retained earnings. Its WACC is now 7% and the projected free cash flows for the next three years are -R5 million, R10 million, and R20 million respectively. After Year 3, free cash flow is projected to grow at a constant 5%. What is Business Analytics' market value of operations? If it has 10 million shares, R40 million of debt and preferred share combined, and R5 million of non-operating assets, what is the price per share?

2.9 Suppose Business Analytics decided to issue preferred share that would pay an annual dividend of R5.00 and that the issue price was R100.00 per share. What would be the share's expected return? Would the expected rate f return be the same if the preferred share was a perpetual issue or if it had a 20-year maturity?

This assignment is the same for both Florida & non Florida students. This problem requires the student to develop a simple budget. At the end of the course, the student will receive a STAR for completing this assignment. This assignment must be completed in either MS Excel or in with a MS Word table*

Budget Case Problem

Meadow Lake Elementary will receive 600 additional students next fiscal year. This increase in student enrollment will raise the school over the number needed for several additional staff. You are only concerned with the budget for the additional students.

Your school will be allocated an additional:

Description    Salary Costs

Assistant Principal $ 53,000

Guidance Counselor $ 48,000

4 six-hour Teacher Aides $  9,600 each

Regular Classroom Teachers $ 48,000 each

One ESE Classroom Teacher $ 48,000 each

One Speech/Language Teacher  $ 48,000 each

One ESOL Teacher $ 48,000 each

One Custodian     $ 20,000

Secretary Clerk    $ 14,000

Data Processor,   $ 16,000

The regular education student-teacher formula is 20:1

The school will also receive:

A.  $ 4 per student for administrative supplies

B.  $16 per student for classroom supplies for regular teacher

C.  $ 5 per student for custodial supplies

D.  $ 300 per classroom teacher (ALL teachers except speech/language) for textbooks

E.  $ 200 per ESE teacher for ESE supplies

F.  $ 200 per ESOL Teacher for ESOL supplies

G.  A computer package for making class presentations for each regular, ESE, and ESOL teacher (not Speech) (package includes laptop computer with LCD projector) - cost per package is $3,500 per teacher.

H.  Substitute budget for $ 5,000

Outline and total the school's additional budget resources based on the increased enrollment. Use State of Florida Function and Objectcodes (Redbook codes), and group the budgeted items by common function.

Use the following headers: (an Excel spreadsheet is available to assist with this assignment)

  FUNCTION  OBJECT     DESCRIPTION     EMP. CT.  SALARY  NON-SALARY

Using the following employee benefit costs, determine the TOTAL employee costs for the enrollment increase (Salary + Benefits)

  Variable Benefits  Fixed Benefits

  Retirement   10.40%     Health $ 7,500

  FICA     7.65%   Life $   125

  Work Comp    1.50%

  Total   19.55%      $ 7,625

1. What are the Function & Object codes for each of the personnel items?  – (4 points, ½ point for each incorrect Function or Object code).

2. What are the Employee Counts for each Function group? (2 points, ½ point for each incorrect employee count)

3. What are the total non-Salary Costs, by Function and Object, for the non-salary items for these additional 600 students? (3 points, ½ points for each incorrect Function, Object, or total cost)

4. What are the total variable and fixed employee benefit costs? (1 point, ½ point each)

INFECTIOUS DISEASE CASE STUDY 17- Gram - Coccobacilli Three-year-old Michael is brought to the emergency room of a large metropolitan hospital by his parents. What began about a week ago as a seemingly mild cold has turned into a severe cough. Michael has experienced several “fits” of coughing in the past 24 hours. Each seems to become more violent. During the latest, he seemed unable to get air and had begun to turn blue in the hands, feet, nose, and lips. Between coughs, he noisily gasps for air. After a quick examination, the doctor readily admits him in respiratory isolation. Laboratory Diagnosis A nasopharyngeal swab is obtained and quickly sent to the laboratory for culturing in Bordet-Gengou medium containing fresh blood. After five days of incubation, tiny glistening colonies with a pearl-luster appearance were visible. A narrow zone of hemolysis is present around the colonies. Immunofluorescent staining revealed tiny coccobacilli.

1. Which of these is the most likely cause of Michael’s symptoms? (1 point) - Diphtheria - Pertussis - Tuberculosis - Pneumocystis carnii

2. What is the name of the microorganism that causes this infection? Type answer as two words, using appropriate capitalization and separating each word with one space. (1 point)

3. What is the common name of this infection? Type answer as two words, separated by one space and using lowercase letters. (1 point)

4. Explain why this infection was given this common name. Type answer as 1 or 2 short sentences in your own words and using correct spelling, grammar and punctuation. Copied and pasted answers may receive 0 credit. (2 points)

5. Most cases of this infection occur in what population? (1 point) - Children under 5 and older adults - children 4 years of age and under - Immunocompromised individuals - teenagers to young adults

6. The route of transmission for this infection is primarily through _______________. - Feces - Respiratory droplets - Bodily fluids - Parenteral injection

7. During the catarrhal stage of this infection, which of the following symptoms occur? Mark all that apply. - Whoop sound upon inhalation - sneezing - Nasal drainage - nasal congestion - Hacking cough - occasional cough

8. During the paroxysmal stage of this infection, which of the following symptoms occur? Mark all that apply. - Whoop sound upon inhalation - sneezing - Nasal drainage - nasal congestion - Hacking cough - occasional cough

9. What standard “well baby” immunization procedure has Michael likely missed? Be specific please

10. Knowing the immunization for this infection was likely missed, for what other diseases is Michael at risk? Explain. Be specific.

11. What is the prescribed treatment for this infection?

Part A:

Rainbow City had the following transactions during the year.

Required: Prepare the necessary journal entries in the appropriate governmental fund general journal and the government-wide governmental activities general journal for each of the following Rainbow City transactions.

1. The city received a donation of land that is to be used by Parks and Recreation to develop a public park. At the time of the donation, the land had an acquisition value of $4,800,000 and was recorded on the donor’s books at a historical cost of $3,800,000.
2. The Public Works Department sold machinery with a historical cost of $35,100 and accumulated depreciation of $28,700 for $5,000. The machinery had originally been purchased with special revenue funds.
3. A car was leased for the mayor’s use. The first payment was $800, and the present value of the remaining lease payments was $24,000. (Note: the initial cash payment was made by the General Fund.)
4. During the current year, a Capital Projects Fund completed a new public safety building that was started in the prior year. The total cost of the project was $9,720,000. Financing for the project came from a $9,000,000 bond issue that was sold in the prior year and from a $720,000 federal capital grant received in the current year. Current expenditures for the project totaled $1,176,000. The full cost is attributed to the building because it was constructed on city-owned property.
5. The city records a half year of straight-line depreciation on capital assets placed in service during the year. The building in Item 4 has an estimated 30-year life with no salvage value.
6. Due to technological developments, the city determined that the service capacity of some of the technology equipment used by general government has been impaired. The calculated impairment loss due to technology obsolescence was $1,210,000.

Part B:

In the current year, the building occupied by Surf Beach City’s Culture and Recreation Department suffered severe structural damage as a result of a hurricane. It had been 48 years since a hurricane had hit the Rainbow City area, although hurricanes in Rainbow City’s geographic area are not uncommon. The building had been purchased 10 years earlier at a cost of $2,000,000 and had accumulated depreciation of $500,000 as of the date of the hurricane. Based on a restoration cost analysis, city engineers estimate the impairment loss at $230,000; however, the city expects during the next fiscal year to receive insurance recoveries of $120,000 for the damage.

Requirements:

1. Should the estimated impairment loss be reported as an extraordinary item? Explain.
2. Record the estimated impairment loss in the journal for governmental activities at the government-wide level.
3. How should the insurance recovery be reported in the following fiscal year? (You do not need to provide journal entries.)
   • Submit your responses to Part A in Excel format. The answers to Part B can be included on the spreadsheet or be submitted in a Word document.
   • Show calculations for all questions.
   • Support writing portion of the assignment, with credible sources.
   • Use terms, evidence, and concepts from class readings, including professional business language.
   • Review the week’s CT Assignment grading rubric for more information on expectations and how you will be graded.

Henrys mother has been observing her 18 year old songs behavior, and is concerned that something is not right. of late, she has caught him in lies on several occasions and just found out that he killed the family cat and buried it in the backyar.d when confronted about it, he seemed to feel no remorse over his behavior. Hnerys mother is afriad that her son is suffering from ..
-oppositional defiance disorder
-antisocial personality
-Psychotic personality
-DIssasociative disorder

Carolina has recently realized that her 3 month old son sleeps easily when she lays him close to him and rubs him. this is most likely an example of
Imprinting
secure attachment
contact comfort
Stranger anxiety

When a child is able to describe what someone sitting on the opposite side of a doll house can see, the child is in the _________ Stage
-sensori-operational
-pre-operational
-concrete operational
formal operational

Toree recently learned the word dog. now he calls all four legged animals dogs- what process did toree use?

-Assimilation
Object permanence
accomodation
mental representation

Kendras toddler tommy, does not undertsand that when kendra hids a toy under a blanket the toy is till there. what skill has tommy not aquired?
-Assimilation
object permanece
accomodation
mental representation

Mary, a 30. year old maried women was experiencing rapid heart poounding. difficulty breathing and feelings oof unreality tingling in her fingers. Whenever she experienced those symptoms she thought she was having a heart attack, instead of psychoteraphy. she was adviced to have medcation- what medication should she use?
Benzodiazepines
anticonvulsant med
mood stabilizer
antidepresent

Peter is afriad of mice, During conseling session his therapist asked peter to imagine a mouse running through his basement, then a mouse trunning through his living room and a him holding the mouse. The technique used by his therapost is known as-
exposure therapy
systemic desensitization
Habituation
person-centered therapy

Ji's parents expect her to be home at a reasonalbe time. when she is late her mother wants her to s tay home for the rest of the week. Ji never listens to her monther because her mother never enforces the rule she set. What parenting style? Permissive, authoratiatrian, Authoritative, Uninvolved.

Lolani was diagnosed with bulimia, but also has met the DSM-Vs criteria for anxiety and depression. this is an example of__________> Prevalence, the categorical model, the dimensional model, comorbitiy.

Peper is currently in her senior year of college and is about to graduate. she has been eagerly applying for jobs and has recently been offered interviews for five companies. When pepper is trying to pick the company thats best fit for her she is most likely engaging into,,
behavioral control,
cognitive control,
decisional control,
emotional control.