For the situations presented, describe the recommendations the internal auditors should make to prevent the following problems.      

Situation 1: Many employees of a firm that manufactures small tools pocket some of the tools for their personal use. Since the quantities taken by any one employee are immaterial, the individual employees do not consider the act as fraudulent or detrimental to the company. The company is now large enough to hire an internal auditor. One of the first things she did was to compare the gross profit rates for industrial tools to the gross profit for personal tools. Noting a significant difference, she investigated and uncovered the employee theft.

Situation 2: A manufacturing firm’s controller created a fake subsidiary. He then ordered goods from the firm’s suppliers, told them to ship the goods to a warehouse he rented, and approved the vendor invoices for payment when they arrived. The controller later sold the diverted inventory items, and the proceeds were deposited to the controller’s personal bank account. Auditors suspected something was wrong when they could not find any entries regarding this fake subsidiary office in the property, plant, and equipment ledgers or a title or lease for the office in the real-estate records of the firm

Kolkmeyer Manufacturing Company is considering adding two machines to its manufacturing operation. This addition will bring the number of machines to nine. The president of Kolkmeyer asked for a study of the need to add a second employee to the repair operation. The arrival rate is 0.06 machines per hour for each machine, and the service rate for each individual assigned to the repair operation is 0.6 machines per hour.

a. Compute the operating characteristics if the company retains the single-employee repair operation. If required, round your answers to four decimal places.

P₀ =

Lq=

L=

W_{q= _______hours}

_{W=    ______hours}       

b. Compute the operating characteristics if a second employee is added to the machine repair operation. If required, round your answers to four decimal places.

P₀ =

Lq=

L=

W_{q= _______hours}

_{W=    ______hours}       

Each employee is paid $30 per hour. Machine downtime is valued at $70 per hour. From an economic point of view, should one or two employees handle the machine repair operation? Explain. If required, round your answers to two decimal places.

Cost of one employee system: $_____

Cost of two employees system: $_____

Afirmthatproducesaccessoriesforsmartphoneshiredamarketingresearchcompany to find out how much its customers are willing to pay for its cases and screen protectors. The marketing research company found that there are only three types of customers with the following willingess to pay for cases and screen protectors:

Customer A Customer B Customer C

Case $3.25 $8.25 $10.00

Screen Protector $6.00 $3.25 $10.00

Bundle $9.25 $11.50 $20.00

As we did in class, assume that there is only one consumer of each type and that each consumer buys at most one case and one screen protector. Assume also that the marginal cost of production is zero.

(a)If the firm were to charge only individual prices (separate pricing), what prices should it set for its cases and screen protectors to maximize profit? What is the firm’s profit?

(b)After conducting a costly study, an outside consultant claims that the company could make more money from its customers if it sold cases and screen protectors together as a bundle instead of separately (pure bundling). Is the consultant right?

(c)Could you suggest a mixed-bundling pricing strategy that could beat (a) and (b)? Explain.

1. A company has $1,301 in inventory, $4,728 in net fixed assets, $598 in accounts receivable, $254 in cash, $538 in accounts payable, and $5,323 in equity. What is the company's long-term debt?

2. You find the following financial information about a company: net working capital = $1,113; fixed assets = $6,281; total assets = $8,638; and long-term debt = $4,645. What are the company's total liabilities?

14. (3)

The tax rates are as shown below:

Your firm currently has taxable income of $80,800. How much additional tax will you owe if you increase your taxable income by $22,000?

Which one of the following statements is correct?

Multiple Choice

• A general partnership is legally the same as a corporation.

• Income from both sole proprietorships and partnerships that is taxable is treated as individual income.

• Partnerships are the most complicated type of business to form.

• All business organizations have bylaws.

• Only firms organized as sole proprietorships have limited lives.

Kolkmeyer Manufacturing Company is considering adding two machines to its manufacturing operation. This addition will bring the number of machines to nine. The president of Kolkmeyer asked for a study of the need to add a second employee to the repair operation. The arrival rate is 0.06 machines per hour for each machine, and the service rate for each individual assigned to the repair operation is 0.6 machines per hour.

a. Compute the operating characteristics if the company retains the single-employee repair operation. If required, round your answers to four decimal places.

P₀ =

Lq=

L=

W_{q= _______hours}

_{W=    ______hours}       

b. Compute the operating characteristics if a second employee is added to the machine repair operation. If required, round your answers to four decimal places.

P₀ =

Lq=

L=

W_{q= _______hours}

_{W=    ______hours}       

Each employee is paid $30 per hour. Machine downtime is valued at $70 per hour. From an economic point of view, should one or two employees handle the machine repair operation? Explain. If required, round your answers to two decimal places.

Cost of one employee system: $_____

Cost of two employees system: $_____

Gallatin Carpet Cleaning is a small, family-owned business operating out of Bozeman, Montana. For its services, the company has always charged a flat fee per hundred square feet of carpet cleaned. The current fee is $23.95 per hundred square feet. However, there is some question about whether the company is actually making any money on jobs for some customers—particularly those located on remote ranches that require considerable travel time. The owner’s daughter, home for the summer from college, has suggested investigating this question using activity-based costing. After some discussion, she designed a simple system consisting of four activity cost pools. The activity cost pools and their activity measures appear below:

The total cost of operating the company for the year is $358,000 which includes the following costs:

Resource consumption is distributed across the activities as follows:

Job support consists of receiving calls from potential customers at the home office, scheduling jobs, billing, resolving issues, and so on.

Required:

1. Prepare the first-stage allocation of costs to the activity cost pools.

2. Compute the activity rates for the activity cost pools.

3. The company recently completed a 600 square foot carpet-cleaning job at the Flying N Ranch—a 54-mile round-trip journey from the company’s offices in Bozeman. Compute the cost of this job using the activity-based costing system.

4. The revenue from the Flying N Ranch was $143.70 (600 square feet @ $23.95 per hundred square feet). Calculate the customer margin earned on this job.

Prepare the first-stage allocation of costs to the activity cost pools.

Compute the activity rates for the activity cost pools. (Round your answers to 2 decimal places.)

The company recently completed a 600 square foot carpet-cleaning job at the Flying N Ranch—a 54-mile round-trip journey from the company’s offices in Bozeman. Compute the cost of this job using the activity-based costing system. (Round your intermediate calculations and final answer to 2 decimal places.)

The revenue from the Flying N Ranch was $143.70 (6 hundred square feet @ $23.95 per hundred square feet). Calculate the customer margin earned on this job. (Negative customer margins should be indicated with a minus sign. Round your intermediate calculations and final answers to 2 decimal places.)

You are attempting to determine whether you are taller or shorter than the average student currently enrolled in your university. You have just learned about sampling and have decided to sample students to determine the average height at your university.

Required: What are some advantages and disadvantages of using sampling to answer this question as opposed to examining the entire population? Give some other examples of when you would be more likely to use sampling (applied to this particular example) as opposed to examining the entire population. In what cases might you want to examine the entire population?

3. The Idaho State University athletics department conducted a research study to see how many students attended a women’s lacrosse game last season. There are 14,400 students attending Idaho State University, and the study showed that 400 of 1250 students sampled attended a women’s lacrosse game. What inferences can be made about student attendance at women’s lacrosse games?

(a) What is the estimated proportion for the population?

(b) Using the 95% level of confidence, what is the confidence interval?

(c) Using the 99% level of confidence, what is the confidence interval?

PLEASE SHOW ALL WORK

You are attempting to determine whether you are taller or shorter than the average student currently enrolled in your university. You have just learned about sampling and have decided to sample students to determine the average height at your university.

Required:

What are some advantages and disadvantages of using sampling to answer this question as opposed to examining the entire population?

Give some other examples of when you would be more likely to use sampling (applied to this particular example) as opposed to examining the entire population.

In what cases might you want to examine the entire population?

Background: Leaders are the most important and powerful influence on the culture of an organization. A leader must earn and develop credibility and trust from desirable actions and behaviours. This activity is aimed at helping students (as future leaders) to consider the role of the leader in setting the moral tone and ethical climate at the workplace.

Instructions: Discuss your approach to the following 4 ethical dilemmas, in terms of the potential consequences that each dilemma present and your leadership advice.

SCENARIO A: Sorenson has been the head of the Sales department for the last 6 months. Approaching the end of the financial year, Thomas, the president of the company wants him to increase the projections for new sales for the next year in order to guarantee that the board endorses their new product line. The current data does not support the numbers the president wants to use. On the one hand, Sorenson does report directly to the president and he wants Thomas to see him as a team player. On the other hand, the numbers can lead to devastation if the sales team does not come through by the middle of next year. What should Sorenson do?

SCENARIO B :Sara is a relatively new lecturer at the university and is eager to show that she fits in well with the existing culture. Although new, her husband is a well-known benefactor to the university and to the faculty where Sara works. Jenny, a teaching assistant assigned to Sara’s courses, informs her of complaints she has received from Sara’s students about her inability to answer questions in class and her inaccessibility after class. Fearing that she would lose her job, Sara approaches the faculty Dean to falsely report that the students were complaining about Jenny. The Dean calls Jenny into a meeting and asks her to respond to the allegations. Advise Jenny.

SCENARIO C: Joe and Elena have openly expressed their interest in filling the post of vice president of student affairs for a faith-based educational institution after Mrs. Hayward’s retirement. One evening, Joe was trolling various social media platforms when he discovered a video of Elena behaving unruly at a music festival in 1998. Determined to set a high standard for staff and students, the employer frowns heavily upon any unfavourable behaviours of their employees. If he presents this video to the hiring manager, it will look as if he wanted to undermine Elena’s chance of getting the job. What should he do?


SCENARIO D: Zoya works for a small toy manufacturing company that offers a wide variety of products to the popular GoodSmart franchise. One of the designers of the latest action figure was recently fired for falsifying reports on recent test trials to push the toy to market. Apparently, the latest action figure posed a potential choking hazard to young children. Zoya wonders if she should report the potential hazard before anyone gets hurt. However, the recall would cost her company money and result in loss of sales. Advise Zoya.