Cortex Business Solutions operates a trading partner network that allows firms to digitize their customer invoicing. Cortex focuses exclusively on North American Oil & Gas firms, which it calls “buyers." When a buyer signs onto the network, all of its suppliers are included in the network. Cortex generates recurring revenue primarily through a fee charged for each supplier invoice processed through the network. Sales are forecasted on the basis of transactions processed through the network, or "Billable Transactions." Thus, Sales #Billable Transactions x Price. = Last year, the average price was $2.18 per transaction. Billable transactions are modelled as follows: Billable transactions = #Buyers x #Suppliers per Buyer x #Transactions Where #Buyers = the number of oil and gas companies using the network #Suppliers per buyer = the average number of suppliers per buyer #Transactions = the average number of transactions per buyer-supplier pair Last year, there were 75 buyers on the network, each buyer had an average of 110 suppliers and the average supplier processed 553 invoices. Forecast sales for next year assuming that the number of buyers rises by 10% and the price per billable rises by 3%. (Assume that the average number of suppliers and transactions per supplier stay constant.)

Hepworth Credit Corporation is a wholly owned subsidiary of a large manufacturer of computers. Hepworth is in the business of financing computers, software, and other services that the parent corporation sells. Hepworth has two departments that are involved in financing services: the Credit Department and the Business Practices Department. The Credit Department receives requests for financing from field sales representatives, records customer information on a preprinted form, and then enters the information into the computer system to check the creditworthiness of the customer. (Other actions may be taken if the customer is not in the database.) Once creditworthiness information is known, a printout is produced with this information plus other customer-specific information. The completed form is transferred to the Business Practices Department. The Business Practices Department modifies the standard loan covenant as needed (in response to customer request or customer risk profile). When this activity is completed, the loan is priced. This is done by keying information from the partially processed form into a personal computer spreadsheet program. The program provides a recommended interest rate for the loan. Finally, a form specifying the loan terms is attached to the transferred-in document. A copy of the loan-term form is sent to the sales representative and serves as the quote letter. The following cost and service activity data for the Business Practices Department are provided for the month of May: All materials and supplies are used at the end of the process Required: 1. How would you define the output of the Business Practices Department? 2. Using the FIFO method, prepare the following for the Business Practices Department: a. A physical flow schedule b. An equivalent units schedule c. Calculation of unit costs d. Cost of ending work in process and cost of units transferred out e. A cost reconciliation

A

Lamar LLC is in the process of updating its revenues and receivables systems with the implementation of new accounting software. James Loden, Inc. is an independent information technology consultant who is assisting Tamar with the project. James has developed the following checklist containing internal control points that the company should consider in this new implementation: Will customer orders be received via the Internet? Are all collections from customers received in the form of checks? Are product quantities monitored regularly?