1. Business Decision Case Elizabeth Flanigan and Associates is an engineering and design firm that specializes...
Fantastic news! We've Found the answer you've been seeking!
Transcribed Image Text:
1. Business Decision Case Elizabeth Flanigan and Associates is an engineering and design firm that specializes in developing plans for recycling plants for municipalities. The firm uses a job costing system to accumulate the cost associated with each design project. Flanigan employs three levels of employee: senior engineers, associate engineers, and clerical staff. The salary cost of the senior en- gineers and the associate engineers is assigned to each project as direct labor. The salary cost of the clerical staff is included in overhead, along with the cost of engineering supplies, automobile travel, and equipment depreciation. The cost of airline travel, motels, building permits, and fees from other consultants is charged to each project as direct materials. Overhead is applied to projects using a predetermined overhead rate based on total engineering hours. The rate for 20X0 is $5 per hour. The six different salary levels for 20X1 for the employees of Elizabeth Flanigan and Associates are listed below. The hourly rate is determined by dividing the yearly salary by 2,000 hours per year. Senior engineer Level 1: $44.000 per year ($22 per hour) Level 2 $36,000 per year ($18 per hour) Associate engineer Lovel 3: $30,000 per year ($15 per hour) Level 4: $24,.000 per year (S12 per hour) Clerical staft Level 5: $16,000 per year (S8 per hour) Level 6: $14,500 per year (57.25 per hour) The billings that are sent to the municipalities for engineering services utilize cost-plus billing. Typically, the total costs accumulated for a project (direct materials, direct labor, and overhead) are multiplied by 140% to determine the amount of the billing. The difference between the billed amount and the accumulated cost is the "plus" in cost plus. During March 20X1, Flanigan accumulated the following information related to Job 295 for Johnson Creek City: Senlor engineer hours Level 1 52 84 Level 2 Associate engineer hours Level 3 106 44 Level 4 Clerical hours Level 5 20 Level 6 Building permits Airline travel and motel $1,500 S865 Required What amount should be billed to Johnson Creek City for March 20X1? b. How much profit was earned on Job 295 during March 20X1? a. EYK3-2. Corporate Social Responsibility Problem The CSR box in this chapter discusses CH2M Hill's ef- forts to offer summer programs at no cost introducing underrepresented groups to STEM education. The company's stated goal is twofold: to increase the pool of future engineering talent and to build better communities. Some would look at these efforts as costly programs with no tangible financial benefit. There is certainly no guarantee that these children will work for CH2M Hill in the future, or even that they will choose careers in engincering. In fact, these efforts may end up supplying talent for CH2M Hill's competitors and driving up future engineering wages. What do you think? EYK3-3, Ethies Case Metal Creations, Inc., is a custom manufacturer that uses a job order costing system. Currently, Metal Creations has 35% excess capacity in its factory. Charlie Rollins, the president, has instituted a campaign to obtain new customers. Rollins has offered the salespeople a bonus equal to 25% of the gross profit on work for new customers. The average gross profit rate has been 30% of the contract price. Steve Starling, the sales manager for Metal Creations, wants to submit a proposal to a new customer that undercuts the usual pricing structure by 30%. As a result, this job would have no gross profit using the regular job order costing system. Instead, Starling suggests that the overhead rate applied to this job should be only 40% of the normal overhead rate, resulting in a gross profit of 28%. Starling suggests that the controller should handle this contract herself, and that no one else in the organization should know about it, especially the other salespeople, because the creative approach to overhead application might create problems. Required Does taking an order at a significantly reduced price create an ethical problem? Does altering the accounting for a particular order create an ethical problem? Does asking the controller to handle the contract and keep the accounting confidential create an ethical problem? 1. Business Decision Case Elizabeth Flanigan and Associates is an engineering and design firm that specializes in developing plans for recycling plants for municipalities. The firm uses a job costing system to accumulate the cost associated with each design project. Flanigan employs three levels of employee: senior engineers, associate engineers, and clerical staff. The salary cost of the senior en- gineers and the associate engineers is assigned to each project as direct labor. The salary cost of the clerical staff is included in overhead, along with the cost of engineering supplies, automobile travel, and equipment depreciation. The cost of airline travel, motels, building permits, and fees from other consultants is charged to each project as direct materials. Overhead is applied to projects using a predetermined overhead rate based on total engineering hours. The rate for 20X0 is $5 per hour. The six different salary levels for 20X1 for the employees of Elizabeth Flanigan and Associates are listed below. The hourly rate is determined by dividing the yearly salary by 2,000 hours per year. Senior engineer Level 1: $44.000 per year ($22 per hour) Level 2 $36,000 per year ($18 per hour) Associate engineer Lovel 3: $30,000 per year ($15 per hour) Level 4: $24,.000 per year (S12 per hour) Clerical staft Level 5: $16,000 per year (S8 per hour) Level 6: $14,500 per year (57.25 per hour) The billings that are sent to the municipalities for engineering services utilize cost-plus billing. Typically, the total costs accumulated for a project (direct materials, direct labor, and overhead) are multiplied by 140% to determine the amount of the billing. The difference between the billed amount and the accumulated cost is the "plus" in cost plus. During March 20X1, Flanigan accumulated the following information related to Job 295 for Johnson Creek City: Senlor engineer hours Level 1 52 84 Level 2 Associate engineer hours Level 3 106 44 Level 4 Clerical hours Level 5 20 Level 6 Building permits Airline travel and motel $1,500 S865 Required What amount should be billed to Johnson Creek City for March 20X1? b. How much profit was earned on Job 295 during March 20X1? a. EYK3-2. Corporate Social Responsibility Problem The CSR box in this chapter discusses CH2M Hill's ef- forts to offer summer programs at no cost introducing underrepresented groups to STEM education. The company's stated goal is twofold: to increase the pool of future engineering talent and to build better communities. Some would look at these efforts as costly programs with no tangible financial benefit. There is certainly no guarantee that these children will work for CH2M Hill in the future, or even that they will choose careers in engincering. In fact, these efforts may end up supplying talent for CH2M Hill's competitors and driving up future engineering wages. What do you think? EYK3-3, Ethies Case Metal Creations, Inc., is a custom manufacturer that uses a job order costing system. Currently, Metal Creations has 35% excess capacity in its factory. Charlie Rollins, the president, has instituted a campaign to obtain new customers. Rollins has offered the salespeople a bonus equal to 25% of the gross profit on work for new customers. The average gross profit rate has been 30% of the contract price. Steve Starling, the sales manager for Metal Creations, wants to submit a proposal to a new customer that undercuts the usual pricing structure by 30%. As a result, this job would have no gross profit using the regular job order costing system. Instead, Starling suggests that the overhead rate applied to this job should be only 40% of the normal overhead rate, resulting in a gross profit of 28%. Starling suggests that the controller should handle this contract herself, and that no one else in the organization should know about it, especially the other salespeople, because the creative approach to overhead application might create problems. Required Does taking an order at a significantly reduced price create an ethical problem? Does altering the accounting for a particular order create an ethical problem? Does asking the controller to handle the contract and keep the accounting confidential create an ethical problem?
Expert Answer:
Answer rating: 100% (QA)
Question 1 128905 b 3683 Explanation Prepare the table to compute the amo... View the full answer
Related Book For
Business Statistics
ISBN: 978-0321925831
3rd edition
Authors: Norean Sharpe, Richard Veaux, Paul Velleman
Posted Date:
Students also viewed these general management questions
-
A company that specializes in developing concrete for construction strives to continually improve the properties of its materials. To increase the compressive strength of one of its new formulations,...
-
A law firm that specializes in personal injury work has engaged you to assist in some litigation. The firm represents a Mr. Lawson, who was injured in an automobile accident and is alleging that he...
-
A firm that specializes in preparing recent law school graduates for the state bar exam has formulated two alternatives to their current preparation course. To examine the relative effectiveness of...
-
(8) (Non circular cylinder) A solid right (noncircular) cylinder has its base the R in the xy-plane and is bounded above by is 22-y + +5 5 * (x + y) dx dy paraboloid 2= x + y . The cylinder's volume....
-
Identify each of the following sources of short- term credit in terms of whether they are secured (include some type of collateral) or are unsecured: Line of credit Pledging of accounts receivable....
-
A sample of size 101 from a normal population has sample standard deviation s = 40. Use Table A.4 to find the exact critical values X2 0.025 and X2 0.975 for a 95% confidence interval, and construct...
-
What are the grounds for seeking an attachment?
-
In 2018, Ginger Graham, age 46 and wife of Greg Graham, engaged in the transactions described below. Determine Ginger's gift tax liability for 2018 if she and Greg elect gift splitting and Greg gave...
-
Let n be a positive integer and consider two n x n matrices M and M2. The Boolean matrix product of M and M2, denoted by M' = M M2, is the nxn matrix M' in which M'[i, j] is: M'[i, j] = (M[1,0] ^...
-
Costa, Inc., recently converted from a 5-day, 40-hour workweek to a 4-day, 40-hour workweek, with overtime continuing to be paid at one and one-half times the regular hourly rate for all hours worked...
-
Hartford, Inc. manufactures a single product. Shown are projected revenues and costs based on last year's income statement (8,000 units) and practical capacity (10,000 units). The costs are either...
-
Indicate whether each of the following statements is true or false by writing T or F in t he a nswer c olumn. A principal is liable for an agents torts and crimes if they were committed in the...
-
Indicate whether each of the following statements is true or false by writing T or F in t he a nswer c olumn. An agent is liable to the principal for any losses that result from the agents neglect or...
-
Indicate whether each of the following statements is true or false by writing T or F in the answer c olumn. The major disadvantage of a sole proprietorship is the fact that the owner of the...
-
Indicate whether each of the following statements is true or false by writing T or F in the answer c olumn. The great majority of small businesses in the United States are organized as limited...
-
Indicate whether each of the following statements is true or false by writing T or F in the answer c olumn. The words pay to the order of are required for an instrument to have negotiability.
-
How did the Maternity Mortality Ratio change over time for Sri Lanka and Finland? What initiatives were successful in changing the Maternal Mortality Ratio? 2. What are some similarities and/or...
-
The swap spread is the difference between the swap rate and the equivalent-maturity Treasury bond yield. Explain why a widening swap spread may be a signal of deteriorating economic conditions. Plot...
-
At a certain coffee shop, all the customers buy a cup of coffee; some also buy a doughnut. The shop owner believes that the number of cups he sells each day is normally distributed with a mean of 320...
-
Heres a regression of monthly revenue of Wal-Mart Corp, relating that revenue to the Total U.S. Retail Sales, the Personal Consumption Index, and the Consumer Price Index. Dependent variable is:...
-
Using the ages from Exercise 1: a) Standardize the minimum and maximum ages using the mean from Exercise 5b and the standard deviation from Exercise 7d. b) Which has the more extreme z-score, the min...
-
The following experimental data are available for \(\mathrm{CO}_{2}\) gas at \(92^{\circ} \mathrm{C}\) : PR 1 2 3 4 6 8 10 0.856 0.583 0.535 0.620 0.800 0.975 1.160 Find the fugacity of CO2 at 100...
-
What do you mean by extent of reaction? Derive an expression of the relationship between mole fraction of the component and the extent of reaction.
-
Give an informatory note on equilibrium constant of the chemical reaction.
Study smarter with the SolutionInn App