1. Types of groups and teams (Connect, Perform)

Use your knowledge of groups and teams to answer the following questions.

Please select the answer that best completes the sentence.

In business organizations, most employees work in --------------- .

For each example presented in the following table, identify the concept being illustrated.

Example	Problem-solving Team	Virtual Team	Cross-functional Team	Self-directed Team
Once the housekeeping unit of a small hotel was organized into this type of team, the employees took responsibility for their own scheduling, ordering their own cleaning supplies, and tracking their performance.
If you need to assemble a team comprised of employees located all over the world, you need to create this type of team.
You want to find a way to reduce the waste your company generates so you create this type of team.

Match each description with the corresponding job design term that best describes it.

Description	Job Design Term
Your female employees have mentioned wanting the organization to allow them to meet with other women in the company for mentoring and professional development purposes. What type of group or team should you create?
Your organization has offices in 6 different countries. You want to create a team that allows employees in all of these countries to collaborate and share ideas and best practices. What type of group or team should you create?
You have a unit of highly capable, motivated employees. You think that they no longer need formal leaders, and can take on more responsibility in setting their own goals and deciding how to best pursue them. What type of group or team should you create?
You get along so well with some of your colleagues at work that you organize a volleyball league and regularly go out together after work to socialize. What type of group or team did you create?

For this activity, I want you to GO OUTSIDE. You don't have to go far. Find a city park. Find a patch of grass. Find your backyard. Find your local playground. But find somewhere where maybe there is some vegetation and some nonhuman animals.

Step 1. Look around you. Make careful observations. What do you see? What kinds of phenomena define the landscape that you see before you? What kinds of organisms travel along with it? How does water move through it (think precipitation, how does water get into the ground? Where is the closest water body where a drop of water might end up?) What kinds of things can't you see that you might be curious about? Don't limit yourself or your thinking. Stretch your mind. Include the land, the sky, the soil, etc. Observe the big picture as well as the tiny picture.

Below, briefly describe the environment around you. Remember the environment includes the atmosphere, biosphere, lithosphere (the ground) and the hydrosphere (lakes, oceans, rain):

Step 2. Now write your observations in the form of scientific questions. Scientific questions are those that can be addressed using observation and hypothesis testing. Write at least ten scientific questions. Think big, think small, and everywhere in between.

Step 3. Pick the question that you think would be the easiest to address using the scientific method and try to form two different possible answers. Frame them in the form of scientific hypotheses: your best guess given your current knowledge of the natural world.

Question picked:

Hypothesis 1:

Hypothesis 2:

Step 4. Now, as best you can, write a paragraph describing an experiment or study you could run to address your question. In your study, tell me what the independent and dependent variables are. What sort of things should be controlled for?

The University of Danville is a private not-for-profit university that starts the current year with $700,000 in net assets: $400,000 without donor restrictions and $300,000 with donor restrictions. The $300,000 is composed of $200,000 with purpose restrictions and $100,000 that must be held permanently.

The following transactions occurred during the year.

1. Charged students $1.2 million for tuition and fees.
2. Received a donation of equity investments that had cost the owner $100,000 but is worth $300,000 currently. According to the terms of the gift, the university must hold the investments forever but can spend the dividends for any purpose. Any changes in the value of these securities must be held forever and cannot be spent.
3. Received a cash donation of $700,000 that must be spent to acquire laboratory equipment.
4. Awarded scholarships to students in the amount of $100,000.
5. Paid salary expenses of $149,000 (teaching), $80,000 (research), $50,000 (administrative), and $40,000 (fundraising).
6. Learned that a tenured faculty member is contributing his services for this year and will not accept his $80,000 salary. His time is 70 percent teaching and 30 percent research.
7. Spent $200,000 of the money in (c) on laboratory equipment. The donor had made no specifications about the recording of the acquisition. The equipment is used 80 percent of the time for research and 20 percent of the time for teaching.
8. Learned that the investments in (b) are worth $339,000 at the end of the year.
9. Received cash dividends of $9,000 on the investments in (b).
10. Computed depreciation expense for the year on the equipment in (g) as $32,000.
11. The school’s board of trustees votes to set aside $100,000 of previously unrestricted cash for the future purchase of library books.
12. Received an unconditional promise of $10,000 halfway through the year. The school expects to collect the money in three years. The $10,000 future payment has a present value of $7,513 based on a reasonable annual interest rate of 10 percent.
13. Received an art object as a gift. It is worth $70,000. For financial reporting, it qualifies as work of art/museum piece. The school prefers not to record such gifts unless required.
14. Paid utilities and other general expenses of $83,000 (teaching), $45,000 (research), $43,000 (fundraising), and $50,000 (administrative).
15. Received free services from alumni who come to campus each week and put books on the shelves in the library. Over the course of the year, the school would have paid $103,000 to have this work done.
16. Near the end of the year, the school received a pledge of $40,000 to be collected in two years. It is judged to be conditional and has a present value of $31,200.

Determine the end-of-year balances for net assets without donor restrictions and net assets with donor restrictions by creating a statement of activities for the period. The school has two program services: education and research. It also has two supporting services: fundraising and administration.

-Compound interest is interest paid not only on the initial investment but also on any interest accumulated in prior periods.

True or false

-Jake purchased 100 shares of ABC stock at $42.50 per share. After seven months, he sold all of his shares at a price of $39.75 a share. Jake received a total of $1.10 per share in dividends during the time he owned the shares. Jake's holding period return is

A. -3.9%.

B. -2.8%.

C. 4.2%.

D. 9.1%.

-The coefficient of variation is used to compare assets with varying rates of return.

True or false

-An ordinary annuity has cash flows that occur at the ________ of each time period and are ________ in amount.

A. beginning; constant

B. beginning; variable

C. end; constant

D. end; variable

-The risk of an asset can be measured statistically on an absolute basis by the coefficient of variation and on a relative basis by the standard deviation.

True or false

-The stated rate of interest is equal to the true rate of interest only when

A. the simple interest method is used.

B. interest is compounded continuously.

C. interest is computed semi-annually.

D. interest is computed monthly.

When the cost of an investment exceeds the present value of its benefits, the investor would be earning a rate of return

A. greater than the discount rate.

B. equal to the discount rate.

C. equal to the compounded rate.

D. less than the discount rate.

In investment theory, the rate of return that could be earned in an inflation-free, perfect world where all outcomes are known and certain is known as the

A. absolute return.

B. required rate of return.

C. real rate of return.

D. expected rate of return.

-The yield is the rate of return that causes a project to have a zero net present value.

true or false

Which one of the following statements is correct?

A. A capital loss is computed as the reduction in the value of an investment minus the income received from that investment.

B. The total return from an investment is equal to the capital gain minus the current income.

C. A capital gain is equal to the amount paid for an investment minus the proceeds received from the sale of that investment.

D. Current income is cash or near-cash that is periodically received as a result of owning an investment.

-The yield assumes you earn the yield rate of return on all income received during the holding period.

True or false

Investors who favor risk free and low risk investments may still be subject to purchasing power risk.

True or false

Most investors are risk-seeking.

True or false

The financial concept of time value of money is dependent upon the opportunity to earn interest over time.

True or false

Three former college classmates have decided to pool a variety of work experiences by opening a store near campus to sell wireless equipment to students. The business has been incorporated as University Wireless.

There are several transactions occurred in March. For each transaction, indicate the accounts that are affected, whether they increase or decrease, and the amount of the increase or decrease.

Possible account type: Cash, Accounts Receivable, Inventory, Prepaid Rent, Fixtures and Equipment, Accounts Payable, Interest Payable, Wages Payable, Notes Payable, Paid-in Capital, Retained Earnings

Transaction 1: On March 1, the three classmates opened a checking account for The Wire at a local bank. They each deposited $23,000 in exchange for shares of stock. A few of their friends also purchased stock for $13,000 that was deposited in The Wire account.

Transaction 2: The company quickly acquired $43,000 in inventory, 60% of which was acquired on open accounts that were payable after 30 days. The rest was paid for in cash.

Transaction 3: A one-year store rental lease was signed on March 1 for $1,200 per month, and rent for the first 4 months was paid in advance. (Note: Record the complete entry for the March 1 transaction first and the complete adjusting entry on March 31 second.)

Transaction 4: The owners paid $2,000 for website advertising. They were able to get a good deal because one of the company's owners also owns stock in the website company. The owners also paid $6,000 for some advertising in local newspapers. (Note: Combine both transactions into one entry.)

Transaction 5: Sales were $60,000. Cost of merchandise sold was 70% of sales. 25% of sales were for cash. (Note: Record the complete entry for the sales first and the complete entry for the expenses second.)

Transaction 6: Wages and salaries in March were $10,300, of which $8,000 was actually paid to employees.

Transaction 7: Miscellaneous expenses were $1,000, all paid for with cash.

Transaction 8: On March 1, fixtures and equipment were purchased for $4,000 with a downpayment of $1,000 and a $3,000 note, payable in one year. Interest of 5% per year was due when the note was repaid. The estimated life of the fixtures and equipment is 9 years with no expected salvage value. (Note: Record the complete entry for the March 1 equipment purchase first, the March 31 depreciation adjusting entry second, and the March 31 interest adjusting entry third. Also, round all answers to the nearest cent.)

Transaction 9: Cash dividends totaling $3,400 were paid to stockholders on March 31.

William is a restaurant owner. He has 5 restaurants in Virginia, Maryland and DC. He is going through an extremely tough time due to Coronavirus crisis.

He had to shut down his restaurants, as ordered by authorities.
His restaurants are allowed to serve “take away” orders, however the revenue is very low to cover his costs.

William’s restaurants are located within a 45 minutes radius. Financial information is shown below;

Restaurant	Locations
1	DC- Business Distric
2	Bethesda
3	Arlington
4	National Harbor
5	Tysons Corner

A typical Profit & Loss Statement of one of his restaurants, before the crisis, is shown below;

Sales	1,430,000	100.00%
Cost of Goods Sold	490,000	34.27%
Gross profit	940,000	65.73%
Labor	312,000	21.82%
Rent	130,000	9.09%
Other expenses	212,000	14.93%
Profit Before Tax	286,000	20.00%

Before the crisis, monthly revenue per restaurant was around $120,000. Now, with take-out only, revenue is down to $10,000 per month per restaurant.

William is aware that his business is rapidly burning cash and he will run out of cash in about 3 months.

William is still very young, therefore retiring or selling the business is not an option for him.

William needs help to make tough decisions. He has heard about you, a bright business professional and you agreed to consult him.

Your Task

Your task is to help William to take the following decisions.

Please provide an answer to each of them and explain why.

1. Should William close restaurants? If yes, for how long? And what should he do after that? Why?

If not, should he continue take away only? Why?

2. Before the crisis, the fair market value for each of his restaurants would be about $1 million. An investor, who is trying to make advantage of the crisis, offered to buy his restaurant in DC for only $100,000.

Would you recommend William to sell or not? Why?

3. Just before the crisis, William was making expansion plans. He was about to sign a lease agreement for a new restaurant near Tysons Corner, which is a booming area with many residential units being developed. It is almost certain, in 2 years’ time, this area will be a hot spot for a restaurant.

Should William sign the lease agreement? What should he do? Why?

4.William is aware if does nothing, he will run out of cash in 3 months. What actions should he immediately take? List your recommendations.

Think as if this is your family business.

Your answers should include numbers.

Milligan Companies, Inc (MCI)is a private company which owns five auto parts stores Houghton. MCI has gone from two auto parts stores to five stores in the last three years, and it plans on continued growth. Sheila and Walter own the majority of the stock. Sheila is the chairman of the board and the CEO. Walter is the COO as well as the CFO. Shares not owned by Sheila and Walter are owned by friends and family who helped get MCI started. Sheila started the company with one store after working in an auto parts store. To date, she has funded growth from an inheritance and investments from a few friends. They are thinking about expanding by several more stores in the near future.
MCI employs 20 full time staff. These workers are employed in store management, parts delivery and accounting. About 40% of MCI is retail walk-in business and the other 60% is regular customers where MCI delivers parts and bills these customers on account. During peak periods, MCI also uses part-time employees.
Your accounting firm ACC4100, is conducting the annual audit for the year ended December 31, 2020. Your audit team discovers numerous misstatements, mostly caused by human error and weak internal control. In aggregate, the misstatements are material, but management agrees to make your recommendation adjustments. Also, during 2020, MCI changed its method of valuing inventory from a weighted-average method to FIFO. When Sheila opened the first store, she thought the easiest way to value inventory was to use an average cost for each category of items. As the company grew, they never revised this practice. Now that the company is significantly larger with multiple stores, Sheila realize they need to be more focused on tracking inventory costs because of the impact of their profit margin.   The change was made to FIFO because it is more commonly used in the industry.
Your team concludes fieldwork on March 1, 2021 and Sheila is planning to provide the auditing financial statements and audit report to its lenders on March 6, 2023
A.      Does KCI have a justified change in accounting principle? If so, how should the change be presented in the financial statements?
B.      Assuming KCI has a justified change in accounting principle and has accounted for the change properly, draft the report that the CPA will issue.
C.      If management does not make agree to make the adjustments to correct the financial statements, and does not properly present the change in accounting principle in the financial statements. What reporting options does the CPA firm have?

THE PEACH COMPUTER COMPANY Donald Bright, supply manager at the Peach Computer Company, was preparing his notes for a meeting to be held that afternoon. The meeting concerned the construction of a new $6 million, 120,000-square-foot building to be located near Dayton, Ohio. The principle issue to be discussed, and hopefully resolved, was what method of specification the firm should use in the purchase of its new building. When the requirement for the building first arose, the plant engineer at Peach advocated the use of a design firm as the desired method of developing the specifications. Such firms were employed successfully by Peach on seven previous construction projects it had completed during the past five years. Under this approach, a design firm, traditionally referred to as an architect-engineer or simply A-E, is retained to develop the detailed plans and specifications for the new building. These specifications are identical in concept to the materials and method-of-manufacture specifications used in the manufacturing industry to purchase manufactured goods. After they are developed and approved, the construction plans and specifications in sequence become (1) the basis for solicitation of bid prices from qualified construction firms, (2) the cardinal part of the resulting construction contract, and (3) the standard against which inspections are performed. Don had conducted some preliminary discussions with members of the Dayton Institute for Supply Management regarding the cost for A-E services. He learned that the fees for local projects similar to his were averaging 8 percent of estimated construction cost. This percentage was in line with Peach’s experience on its own projects. One of the members of the Dayton chapter with whom Don talked suggested that he read an article in an issue of the California Management Review (CMR). The article, entitled “Inflation, Recession, and Your Building Dollar,” dealt with the purchase of building construction. Don learned that several alternative approaches to supplying building construction were available. One approach particularly appealed to him. It provided for the use of performance specifications. Such specifications, instead of describing the building item by item in terms of its physical properties, describe in words the building’s intended function, i.e., how large it must be; how well lighted, heated, and cooled it must be; its longevity; its operating costs; and so on. After the performance description is developed, it is used to solicit from qualified bidders a package proposal that includes (1) a design approach, (2) a firm agreed price, and (3) a guaranteed completion date. The CMR article documented that when properly used, performance specifications for buildings can result in a significant savings in both dollars and time. Additionally, the article data revealed that when this method is correctly used, a considerable savings in both the cost and the time required to complete the project is a reasonable expectation. Furthermore, the article indicated that the buyers of buildings purchased under this method have experienced approximately equal satisfaction with their buildings as those who used A-E’s. In preparation for the afternoon meeting, Don decided to develop lists of advantages and disadvantages for each of the two approaches he was considering. After an evaluation of both lists, Don expected to be able to make a formal recommendation as to which method he thought Peach should employ.

1. Should Don get any additional information? Explain.

2. Discuss the inherent advantages and disadvantages of using performance specifications.

3. Discuss the inherent advantages and disadvantages of the plans and specifications method of describing quality.

4. Assuming that Don’s investigation and analysis indicates that both methods are practical for use by Peach, discuss which approach Don should recommend.

5. Explain why one method will require more active involvement on Don’s part than the other approach.

Evian Corporation is a private corporation formed for the purpose of providing

the products and the services needed to irrigate farms, parks, commercial projects,

and private homes. It has a centrally located factory in a U.S. city that manufactures the

products it markets to retail outlets across the nation. It also maintains a division that

provides installation and warranty servicing in six metropolitan areas.

The mission of Evian is to manufacture quality parts that can be used for effective

irrigation projects that also conserve water. By that effort, the company hopes to satisfy

its customers, provide rapid and responsible service, and serve the community and

the employees who represent them in each community.

The company has been growing rapidly, so management is considering new ideas to

help the company continue its growth and maintain the high quality of its products.

Evian was founded by Will Winkman who is the company president and chief

executive officer (CEO). Working with him from the company’s inception was Will’s brother,

Ben, whose sprinkler designs and ideas about the installation of proper systems have been

a major basis of the company’s success. Ben is the vice president who oversees all aspects

of design and production in the company. The factory itself is managed by Todd Senter who hires his line managers to supervise the factory employees. The factory makes all of the parts for the irrigation systems. The purchasing department is managed by Hector Hines.

The installation and training division is overseen by vice president Henry Writer, who

supervises the managers of the six local installation operations. Each of these local managers

hires his or her own local service people. These service employees are trained by the home

office under Henry Writer’s direction because of the uniqueness of the company’s products.

There is a small Human Resources department under the direction of Sally Fenton,

a vice president who handles the employee paperwork, though hiring is actually performed

by the separate departments. Sam Totter is the vice president who heads the sales

and marketing area; he oversees 10 well-trained salespeople.

The accounting and finance division of the company is headed by Abe Headman, who

is the chief financial officer (CFO) and a company vice president; he is a member of the

Institute of Management Accountants and holds a certificate in management accounting.

He has a small staff of Certified Public Accountants, including a controller and a treasurer,

and a staff of accounting input operators who maintain the financial records.

A partial list of Evian’s accounts and their balances for the month of November 2012 follows.

Accounts Receivable                                                                $ 245,000

Advertising Expenses                                                                   54,000

Cash                                                                                                250,000

Depreciation—Factory Equipment                                              16,800

Depreciation—Office Equipment                                                  2,400

Direct Labor                                                                                     42,000

Factory Supplies Used                                                                   16,800

Factory Utilities                                                                               10,200

Finished Goods Inventory, November 30                                                67,700

Finished Goods Inventory, October 31                                       72,500

Indirect Labor                                                                                 48,000

Office Supplies Expense                                                                 1,600

Other Administrative Expenses                                                  72,000

Prepaid Expenses                                                                          41,250

Raw Materials Inventory, November 30                                   52,600

Raw Materials Inventory, October 31                                      38,300

Raw Materials Purchases                                                           184,500

Rent—Factory Equipment                                                          47,000

Repairs—Factory Equipment                                                       4,500

Salaries for the office workers                                               325,500

Sales                                                                                         1,225,000

Sales Commissions                                                                      40,500

Work In Process Inventory October 31                                    52,700

Work In Process Inventory, November 30                              41,000

Instructions for part 1

(a) Based on the information given, construct an organizational chart of Evian

Corporation. (see illustration 1-2 in text)

(b) A list of accounts and their values are given above. From this information, prepare a cost of goods manufactured schedule, a cost of goods sold schedule, an income statement, and the current assets section of the balance sheet for Evian Corporation for the month of November 2012. (see illustrations in the text)

Part 2

Evian has two major public-park projects to provide with comprehensive

irrigation in one of its service locations this month. Job J57 and Job K52 involve 15 acres

of landscaped terrain which will require special-order sprinkler heads to meet the specifications

of the project. Using a job cost system to produce these parts, the following

events occurred during December 2012:

Raw materials were requisitioned from the company’s inventory on December 2 for

$4,995; on December 8 for $960; and on December 14 for $3,306. In each instance, two-

thirds (2/3) of these materials were for J57 and the rest for K52.

Six time tickets were turned in for these two projects for a total amount of 18 hours

of work. All the workers were paid $16.50 per hour. The time tickets were dated December 3,

December 9, and December 15. On each of those days, 6 labor hours were spent on these

jobs, two-thirds (2/3) for J57 and the rest for K52.

The predetermined overhead rate is based on machine hours. The expected machine

hour use for the year is 2,112 hours, and the anticipated overhead costs are $842,688

for the year. The machine were used by workers on projects K52 and J57 on December 3, 9,

and 15. Six machine hours were used for project K52 (2 each day), and 8.5 machine hours

were used for project J57 (2.5 the first day and 3 each of the other days). Both of these

special orders were completed on December 15, producing 235 sprinkler heads for J57

and 145 sprinkler heads for K52.

Additional job order activities during this period of time included:

Dec. 1 Purchased raw materials from Durbin Supply Company on account for $53,200.

Dec. 2 Issued $42,000 of direct materials from the company’s inventory to jobs other than K52 and J57 and $3,000 of indirect materials.

Dec. 12 Paid Evian’s factory salaries and wages in the amount of $67,000.

Dec. 13 Paid the factory’s water bill of $3,000.

Dec. 18 Transferred $50,000 of costs from other completed jobs to finished goods.

Dec. 21 Paid the factory’s electric bill of $12,000 for factory.

Instructions for part 2

(a) Set up the job cost sheets for Job No. J57 and Job No. K52. Determine the total cost for each manufacturing special order for these jobs. (Round unit cost to nearest cent.)

(b) Journalize the activities from these job cost sheets in the general journal. Also journalize the other costs that occurred during this period of time.

(c) Assuming that Manufacturing Overhead has a credit balance of $3,400, determine whether overhead has been under/over applied and make the adjusting entry.

Part 3

Because most of the parts for its irrigation systems are standard, Evian handles

the majority of its manufacturing as a process cost system. There are multiple process

departments. Three of these departments are the Molding, Cutting, and Welding departments.

All items eventually end up in the Package department which prepares items for

sale in kits or individually.

The following information is available for the Molding department for January.

Work in process beginning: 22,000 units , Total costs in beginning work in process $252,854

Costs in work in process inventory:   Materials $168,020, Labor 67,564, Overhead 17,270

Units started into production in January 60,000

Units completed and transferred-out in January 58,000

Costs added to production: Materials $264,940, Labor 376,188, Overhead 60,578 =Total costs added into production in January $701,706

Work in process ending:

Units in process 24,000

Stage of completion for materials 100%

Stage of completion for labor and overhead 30%

Instructions for part 3

(a) Prepare a production cost report for Evian using the weighted-average method.

Part 4

Direct labor or machine hours may not be the appropriate cost driver for overhead

in all areas of manufacturing due to the complexities of many manufacturing

processes. Many companies use activity-based costing (ABC) which uses multiple drivers

(items that consume resources) rather than just one driver to apply overhead to their

activities. With ABC, a company can use a cost driver that has a direct cause/effect relationship

in its applied overhead costs.

Evian looked into ABC as a method of costing because of the variety of items it

produces and the many different activities in which it is involved. The activities listed

below are a sample of possible cost pools for Evian.

Assembling

Payroll

Billing

Plant supervision

Digging trenches

Purchasing materials

Machine maintenance

Selling

Machine setups

Testing

Molding

Welding

Packaging

Instructions for part 4

(a) For each of these cost pools, what would be the likely activity cost driver?

(b) Using the following information, determine the overhead rates and the actual cost assigned for each of the activity cost pools in a possible ABC system for Evian.

EVIAN CORPORATION

Expected

Use of                              Actual

Estimated           Cost Drivers                             Use of

Activity Cost Pools                        Cost Drivers      Overhead           per Activity                              Drivers

Irrigation installation                    Labor cost         $1,999,500               12,900                                     12,941

Machining (all machine use)       Machine hours 1,670,400         33,408,000                              33,409,000

Customer orders                            # of orders               30,636                    2,553                                       2,520

Shipping                                          none (direct)                    N/A traced directly

Design                                              Cost per design             820                       10                                           7

Selling                                              Number of calls       372,300              21,900                                     22,100

(d) (1) The results of ABC can provide a more accurate picture of costs. Discuss the value of Evian using this system to determine overhead costs.

(2) How might using ABC affect decision making at Evian?