$\backslash$begin$\{$tabular$\}\{|$c$|$c$|$c$|$c$|$c$|\}$

$\backslash$hline $\backslash$multicolumn$\{5\}\{|$l$|\}\{$Table $1.$ Summary Financial Data for Ground Zero Knoxville District$\}\backslash \backslash$

$\backslash$hline Target ROI & $\backslash$multicolumn$\{4\}\{|$l$|\}\{6\backslash \%$ Quarterly $/24\backslash \%$ Annually$\}\backslash \backslash$

$\backslash$hline $\backslash$multicolumn$\{5\}\{|$c$|\}\{$Summary Income Statement Data $($figures in $000$s$)\}\backslash \backslash$

$\backslash$hline & & $2$XX$144$ & $2$XX$201$ & $2$XX$202\backslash \backslash$

$\backslash$hline $\backslash$multicolumn$\{5\}\{|$l$|\}\{$Revenues$\}\backslash \backslash$

$\backslash$hline & Coffee Service & $2100$ & $2150$ & $2175\backslash \backslash$

$\backslash$hline & Snack Sales & $400$ & $450$ & $475\backslash \backslash$

$\backslash$hline Total Revenues & & $2500$ & $2600$ & $2650\backslash \backslash$

$\backslash$hline $\backslash$multicolumn$\{5\}\{|$l$|\}\{$Cost of Goods Sold$\}\backslash \backslash$

$\backslash$hline & Coffee Service & $1260$ & $1290$ & $1305\backslash \backslash$

$\backslash$hline & Snack Sales & $300$ & $340$ & $355\backslash \backslash$

$\backslash$hline Total Cost of Goods Sold & & $1560$ & $1630$ & $1660\backslash \backslash$

$\backslash$hline Gross Profit & & $940$ & $970$ & $990\backslash \backslash$

$\backslash$hline $\backslash$multicolumn$\{5\}\{|$l$|\}\{$Operating Costs$\}\backslash \backslash$

$\backslash$hline & Wages and Salaries & $350$ & $335$ & $330\backslash \backslash$

$\backslash$hline & Contract Services & $125$ & $120$ & $120\backslash \backslash$

$\backslash$hline & Depreciation & $15$ & $25$ & $27\backslash \backslash$

$\backslash$hline & Supplies & $30$ & $28$ & $27\backslash \backslash$

$\backslash$hline & Other & $25$ & $23$ & $22\backslash \backslash$

$\backslash$hline Total Operating Costs & & $545$ & $531$ & $526\backslash \backslash$

$\backslash$hline Operating Income & & $395$ & $439$ & $464\backslash \backslash$

$\backslash$hline $\backslash$multicolumn$\{5\}\{|$l$|\}\{$Assets Committed to Knoxville District $($figures in $000$s$)\}\backslash \backslash$

$\backslash$hline & & $2$XX$104$ & $2$XX$201$ & $2$XX$202\backslash \backslash$

$\backslash$hline $\backslash$multicolumn$\{5\}\{|$l$|\}\{$Current Assets$\}\backslash \backslash$

$\backslash$hline & Cash & $25$ & $25$ & $25\backslash \backslash$

$\backslash$hline & Accounts Receivable & $725$ & $730$ & $740\backslash \backslash$

$\backslash$hline & Inventory & $455$ & $460$ & $470\backslash \backslash$

$\backslash$hline Total Current Assets & & $1205$ & $1215$ & $1235\backslash \backslash$

$\backslash$hline $\backslash$multicolumn$\{5\}\{|$l$|\}\{$Fixed Assets $($net Depr$)\}\backslash \backslash$

$\backslash$hline & Building and Grounds & $2500$ & $2650$ & $2800\backslash \backslash$

$\backslash$hline & Equipment & $1000$ & $995$ & $1050\backslash \backslash$

$\backslash$hline & Mail$-$Order Equipment & & $2400$ & $2600\backslash \backslash$

$\backslash$hline Total Fixed Assets $($net Depr$)$ & & $3500$ & $6045$ & $6450\backslash \backslash$

$\backslash$hline Total Assets & & $4705$ & $7260$ & $7685\backslash \backslash$

$\backslash$hline

$\backslash$end$\{$tabular$\}$ Table $1.$ Select Ground Zero Organizational Hierarchy Case $\backslash$#$2$ Questions:

$1.$ Calculate ROI and RI for the Knoxville district. What aspects of the incentive structure drove Will's behavior? Were these intentional features of the system? Would you recommend changes to the structure for Knoxville? Why?

$2.$ Ground Zero's bonus system for district managers is "all$-$or$-$nothing" with substantial bonuses for meeting the quarterly the ROI target and nothing if the manager misses the target. How might this factor contribute to the behaviors involved? What are other possible alternative bonus structures? How might alternative bonus structures affect district manager behavior?

$3.$ Are the actions that Brewster took in regards to the fake vendors and charging the company for the work he performed fraud? Unethical? Against company policy?

$4.$ What facts here point to fraud or misconduct in Brewster's behavior? What internal control deficiencies could have been present that enabled his actions regarding the fake vendors?

$5.$ Who owns the snack bar idea? If Ground Zero owns the snack bar idea, is it criminal to charge the company for the snacks? Unethical? Against company policy?

$6.$ What is Isabella's professional and ethical responsibility with regard to Will and Ground Zero? What is an appropriate ethical response by Ground Zero leadership to the circumstance? Support your answer with sound ethical reasoning.

$7.$ What internal controls might Ground Zero have put in place that would have prevented Brewster or someone similarly situated from committing the fraud?

$8.$ From the possible controls you proposed in question $7,$ which controls do you believe would be the strongest and why?