RESPONSIBILITY ACCOUNTING FOR COST, PROFIT AND INVESTMENT CENTERS

Module 4 – Case RESPONSIBILITY ACCOUNTING FOR COST, PROFIT AND INVESTMENT CENTERS Assignment Overview Review the three components in the background material to answer the questions and make computations relating to responsibility accounting. Case Assignment Short-Answer Questions 1. What is the fundamental principle of responsibility accounting? 2. List five important factors that should be considered in designing reports for a responsibility accounting system. 3. How soon should accounting reports be prepared after the end of the performance measurement period? Explain. 4. Name and describe three types of responsibility centers and list their main characteristics. 5. Give five real-world examples of at least two of the types of responsibility centers. 6. Many organizations limit the number of expense (cost) centers. a. List three reasons for wanting to limit cost centers. b. List three ideas for eliminating or reducing the size of an existing cost center. 7. What is the connection between the extent of decentralization and the investment center concept? 8. Give some of the advantages of decentralization. 9. Differentiate between a direct cost and an indirect cost of a segment. What happens to these categories if the segments to which they are related are eliminated? Part II Real-World Example Review the background material and do some research to learn about organizations using responsibility centers as part of an organizational structure. Information can be found in the news, research papers, and on investment sites. Another option is to locate the financial statements for a company, make some assumptions, and prepare your own assessment of the organizational structure. Describe the situation and the results. Show computations when appropriate. Assignment Expectations Part I Write 3–5 sentences for each question. Use Word and make a separate submission for this part. Part II Write an essay (300–500 words). Show sources when appropriate. APA format is suggested, but not required. Module 3 – Case DEBTOR/CREDITOR RELATIONS, AGENCY, AND EMPLOYMENT Assignment Overview In this assignment, you will be presented with a variety of hypothetical scenarios. For each scenario, you need to explain the reasoning behind your answer and use at least one reference from the background materials to support your answer. You are free to cite additional sources that are not included in the background materials. However, any citation should be from credible sources such as articles from ProQuest or textbooks from Ebrary rather than random webpages. Your paper should be 4 to 5 pages: Case Assignment 1. Suppose you are the owner of an event planning business. You hire independent contractors to do the setup—place decorations, ensure the food service is as ordered, etc.—at the different events that you organize. One of your independent contractors is stressed one day because you’ve asked him to make some last-minute changes to the seating setup at a corporate conference. On his way to the hotel hosting the event, the independent contractor rams into the back of someone’s car. The driver of the car your independent contractor hit is transported away by ambulance with neck pain. A few weeks later you receive a demand letter from an attorney asking you to pay medical expenses for the driver of the car your independent contractor hit. Do you think you will be liable for these medical expenses? Explain your reasoning. 2. Suppose the company you work for is going through some tough times and your boss has no choice but to let an employee go. Your boss has told you that he is relieved that your workplace is in an “employment-at-will” state. You know your boss was upset that your co-worker Ann had come late to an important client meeting, because she had stopped off to vote on the last election day. The client nearly canceled his order, because he felt disrespected by Ann being late; even though she was able to smooth things over when she finally showed up. To you, it was not a surprise then when you overheard your boss firing Ann and telling her that her lay-off was performance-based, and the company simply couldn’t tolerate employees who were deliberately late for important meetings. Is your boss’ firing of Ann legally justifiable? Explain. 3. You are the owner of a new cauliflower pizza crust manufacturer. The pizza crusts are made primarily of cauliflower and brown rice flour. Your factory supervisor takes the initiative and decides to place an order for more brown rice flour from one of your suppliers while you are out of town. Since the brown rice flour was necessary for keeping operations going while you were gone, you happily pay the supplier for the order when you get back in town. This same employee starts to place new orders for brown rice flour anytime supplies are low, and even though you never gave him formal permission to do this you keep paying the supplier. However, one day you notice that the price that the supplier of brown rice flour is asking is higher than the going rate with other suppliers. You call the supplier and ask for a reduction in price, because you assert that the employee, the factory supervisor, was not authorized to place the order in the first place. Do you think the supplier might insist on getting his original price even though you say the employee was not authorized to place the order? Explain. 4. You are the owner of a beachside restaurant, and you have fallen behind for many months on your loan repayments to the bank (you owe a total of $100,000). The bank has become fed up and now wants you to hand over all of your remaining company funds to pay back the loan. However, the summer tourist season is coming up in a few months and this is where you typically do 60%-70% of your business for the year. Without your company funds you will not be able to pay your rent and pay your staff, so you will not be able to pay back the bank until after the summer season. If you end up needing to file for bankruptcy, what type do you think would be most appropriate for this situation—Chapter 7, Chapter 11, or Chapter 13? 5. Now suppose that you decide to open up a full-service 24-hour auto repair shop. Your shop is the only one that is open 24 hours a day in your home town. In fact, you are pretty sure it is the only 24-hour auto repair shop in the state. Your business is now a great success, but you had a great deal of trouble finally finding an auto mechanic willing to work the late shift. You are now concerned that this mechanic can leave you at any time and go open or help someone else open up a 24-hour shop. You decide to make him sign a noncompetition agreement saying that if he ever leaves your shop he cannot work as an auto mechanic anywhere in your state for the next seven years. He looks at you and says, “Are you out of your mind?” What alternative terms of a noncompetition agreement do you think would be more reasonable? Assignment Expectations • Answer the assignment questions directly. • Stay focused on the precise assignment questions. Do not go off on tangents or devote a lot of space to summarizing general background materials. • Make sure to use reliable and credible sources as your references. Articles published in established newspapers or business journals/magazines are preferred. If you find articles on the Internet, make sure they are from a credible source. • Reference your sources of information with both a bibliography and in-text citations. See the Student Guide to Writing a High-Quality Academic Paper, including pages 13 and 14 on in-text citations. Another resource is the “Writing Style Guide,” which is found under “My Resources” in the TLC Portal.