Mr. Charlie Brown has spent his entire career with the Peanuts Manufacturing Company. He is located in Sarnia, Ontario and started with the company as a production line manager. He has since moved up the ranks of the company, and most recently has been supervising the entire production department. In early 2020, Charlie was offered an opportunity to oversee the construction of a new manufacturing operation in Jacksonville, Florida, USA. If Mr. Brown takes the position, he would move to the United States on May 1, 2020 and when the facility is completed, Mr. Brown would remain as the senior vice president in charge of all of the Florida operations. Mr. Brown and his wife have 2 school age children who are enrolled at the local elementary school in grades 3 and 5. The Browns own a home in Sarnia and are involved in their community. They belong to their local church and a local recreational club where their children take swimming lessons and the family enjoys socializing. The Brown Family is considering the offer to move and is looking for advice on how their Canadian residency for tax purposes would be affected by this potential move. Mr. Brown has been told by the American payroll department that his tax rate will be lower if he is taxed in the United States. Mr. Brown would leave on May 1st, but the Browns are considering having Mrs. Brown and the children stay in Sarnia to finish out the school year which finishes at the end of June.

Required: Create a short (one page) memo explaining the tax policy to your client. Keep in mind that he will have limited understanding of income taxation, so you need to analyze the issue at a high level and then clearly describe the options available to Mr. Brown so that he can make an informed decision about his move and the tax consequences.

Cecil C. Seymour is a 64-year-old widower. He had income for 2018 as follows:

Pension from former employer $39,850

Interest income from Alto National Bank 5,500

Interest income on City of Alto bonds  4,500

Dividends received from IBM stock held for over one year 2,000

Collections on annuity contract he purchased from Great Life Insurance  5,400

Social Security benefits 14,000

Rent income on townhouse 9,000

The cost of the annuity was $46,800, and Cecil was expected to receive a total of 260 monthly payments of $450. Cecil has received 22 payments through 2017. Cecil’s 40-year-old daughter, Sarah C. Seymour, borrowed $60,000 from Cecil on January 2, 2017. She used the money to start a new business. Cecil does not charge her interest because she could not afford to pay it, but he does expect to collect the principal eventually. Sarah is living with Cecil until the business becomes profitable. Except for housing, Sarah provides her own support from her business and $1,600 in dividends on stocks that she inherited from her mother. Other relevant information is presented below: • Expenses on rental townhouse:

Utilities $2,800

Maintenance 1,000

Depreciation 2,000

Real estate taxes 750

Insurance 700

• State income taxes paid: $3,500

• County personal property taxes paid: $2,100

• Payments on estimated 2016 Federal income tax: $5,900

• Charitable contributions of cash to Alto Baptist Church: $6,400

• Federal interest rate: 6%

• Sales taxes paid: $912

Compute Cecil’s 2018 Federal income tax payable (or refund due).

Question: In January 2009, Tom Sosa, the purchasing manager, received a telephone call from their Columbus,...

In January 2009, Tom Sosa, the purchasing manager, received a telephone call from their Columbus, Indiana, diesel engine supplier informing him that effective June they were no longer producing the D-342 diesel engines at the Columbus plant. The D-342 engine sales were decreasing and would no longer be in their product line. Tom was in shock. He was now forced to deal with the sole supplier of the D-342 located in Portland, Oregon. The most recent price schedule submitted by the Oregon engine supplier is given below:

The prices had been basically the same as the Columbus supplier except that they are F.O.B. Portland. The traffic department informed Tom that the transportation cost per hundredweight is $10 for carload lots of 50,000 pounds. The less than carload rate is $15 per hundredweight. The replenishment cycle normally takes one week.

BACKGROUND

Tom Sosa, the supply manager for MARS, Inc. was contemplating several significant changes in the D-342 diesel engine market. Mr. Sosa was concerned because in its production of the 98-D loader, MARS used 10 diesel engines each working day of the month. (MARS operated on a 20-day-per-month schedule.) Each engine weighs 500 pounds. Engine orders are currently placed every Monday morning. For the past 10 years, the D-342 engines had been produced in only two locations in the United States, one in Columbus, Indiana, and the other in Portland, Oregon. Mr. Sosa felt fortunate that the Columbus producer was located approximately 30 miles from his facility. The Columbus supplier offered just-in-time delivery service at no charge to MARS.

MARS implemented lean manufacturing in 2002. The kanban-controlled JIT production system was implemented based on the premise of minimizing work-in-process inventories (waste) by reducing lot sizes in order to increase production efficiency and product quality.

ACTION TAKEN BY TOM

Mr. Sosa compiled cost and warehouse capacity data on the D-342 engine from the accounting department. See Table C17.1.

Mr. Sosa wonders what effects these new developments will have on his cost structure.

Assignment Questions

• What is the difference between all-unit quantity discount and incremental discount schedules? How would the costs and EOQs differ? Which would be preferable assuming that both share the same cost figures?

TABLE C17.1
Cost and Warehouse Capacity

Case 4.21 Arthur Anderson: a Fallen Giant

1. With regard to the destruction of the documents, was there a difference between what was legally obstruction of justice and what was ethical in terms of understanding what was happening at Enron? When the U.S. Supreme Court reversed the Andersen decision, the Wall Street Journal noted that the Andersen case was a bad legal case and a poor prosecutorial decision on the part of the Bush administration. Why do you think the prosecutors took the case forward? What changes under SOX would make the case easier to pursue today?

2. David Duncan was active in his church, a father of three young daughters, and a respected alumnus of Texas A&M. Mr. Duncan’s pastor talked with the New York Times following Enron’s collapse and Duncan’s indictment, and discussed with the reporter what a truly decent human being Duncan was. What can we learn about the nature of   those who commit these missteps? What can you add to your credo as a result of Duncan’s experience? Was the multimillion-dollar compensation he received a factor in his decision-making processes? Can you develop a decision tree on Duncan’s thought processes from the time of the first SPE until the shredding? Using the models you learned in Units 1 and 2, what can you see that he missed in his analysis?

3. In 2000, a full two years before WorldCom’s collapse, Steven Brabbs, WorldCom’s director of international finance and control, who was based in London, raised objections when he discovered after he had completed his division’s books for the year that $33.6 million in line costs had been dropped from his books through a journal entry. He was told that the changes were made pursuant to orders from CFO Scott Sullivan. He next suggested that the treatment be cleared with Arthur Andersen. When there was no response to his suggestion that the external auditor be consulted, Mr. Brabbs again raised his bjections in a meeting with internal financial executives a few months later. Following the meeting, Mr. Brabbs was chastised by WorldCom’s controller for raising the issue again. The following quarter, Mr. Brabbs received orders from WorldCom headquarters to make another similar change, but to do so at his level rather than having it done from corporate headquarters via journal entry. Unwilling to have the entries generate from his division, he created another entity and transferred the costs to it. He voiced his concerns again and was told that there was no choice because the accounting was a“Scott Sullivan directive.” Mr. Brabbs also had a meeting with Arthur Andersen auditors to discuss his concerns. Following the meeting he received e-mail from WorldCom’s controller, David Myers, which directed that Mr. Brabbs was“not [to] have any more meetings with AA for any reason.” When WorldCom’s internal audit staff began to raise questions about the reserves and the capitalization of ordinary expenses, they were prohibited from doing further work and, for the most part, worked nights and weekends to untangle the accounting nightmare they had first discovered with a simple question about receipts for some   capitalized expenses. CFO Scott Sullivan asked the audit staff to wait at least another quarter before continuing with their investigation. Andersen auditors reported any internal audit inquiries to Sullivan and did not follow through on questions and concerns raised. What controls were missing? Why the reporting lines to Sullivan?

4. One of the tragic ironies to emerge from the collapse of Arthur Andersen, following its audit work for Sunbeam, WorldCom, and Enron, was that it had survived the 1980s savings-and-loan scandals unscathed. In Final Accounting: Ambition, Greed and the Fall of Arthur Andersen, the following poignant description appears: “The savings and-loan crisis, when it came, ensnared almost every one of the Big 8. But Arthur Andersen skated away virtually clean, because it had made the decision, years earlier[,] to resign all of its clients in the industry. S&Ls for years had taken advantage of a loophole that allowed them to boost earnings by recording the value of deferred taxes. Arthur Andersen accountants thought the rule was misleading and tried to convince their clients to change their accounting. When they refused, Andersen did what it felt it had to: It resigned all of its accounts rather than stand behind accounting that it felt to be wrong.” What takes a company from the gold standard to indictment and conviction?  

Related samples t-test:

Test whether semester GPA significantly changes during a semester abroad program. Use a related (dependent) samples t-test and alpha = .05 with a nondirectional test. The data are presented below.

Answer the following questions. You can use SPSS, but if you do this problem “by hand” be sure to show your work.

1.       What are the null & alternative hypotheses?
2.       What are the degrees of freedom?
3.       What is the critical value of t?
4.       What is the observed value of t?
5.       What is your decision about the null hypothesis/why?
6.        If appropriate, calculate Cohen’s d and report its value.
7.       Write the t statistic using appropriate APA style.
8.       How would you interpret your findings?    

          Before program                             During program

                   2.94                                        3.03

                   2.22                                        1.79

                   3.12                                        3.13

                   1.99                                        2.97

                   3.43                                        3.75

                   3.08                                        3.11

                   2.81                                        2.98

                   3.72                                        3.92

                   2.18                                         2.03

                   3.60                                        3.52

Name: Date: Exp 1: Observations of Chemical Changes Lab Section: Data Tables: Part 1: Chemicals Well No. Observations of the Reaction A. NaHCO3 + HCl B. HCl + BTB C. NH3 + BTB D. HCl + blue dye E. Blue dye + NaOCl with the 1 drop of HCl F. NaOCl + KI with 1 drop of starch G. KI + Pb(NO3)2 H. NaOH + phenolphthalein I. HCl + phenolphthalein J. NaOH + AgNO3 K. AgNO3 + NH3 after exposure to bright light L. NH3 and CuSO4 Part F: Testing of Various Foods with the NaOCl + KI solution Foods Presence or Absence of Starch Part 2: Household Chemicals with Bromthymol Blue Use the empty pipet in the Auxiliary Supplies Bag to test several (at least 3) household items including household cleaning products with bromothymol blue. Rinse the pipet well before using it on the next household chemical. When finished with this experiment rinse the pipet well and return it to the Auxiliary Bag for use in future experiments. Name the items tested and record their results. Household Chemicals Well No. Observations of the Reaction Conclusion: Questions and Problems: A. Suppose a household product label says it contains sodium hydrogen carbonate (sodium bicarbonate, NaHCO3). How would you test this material for the presence of sodium bicarbonate? B. Looking at the household chemicals you tested with bromthymol blue, what can you deduce from the test results for each of the household chemicals? C. You found a sample of a solution that you think might be vinegar which is acidic. You are verifying that it is indeed vinegar and you add a few drops of phenolphthalein. The sample turns pink. What does that tell you about this sample? D. You suspect dissolved silver ions in a solution. How would you test this solution to confirm the p