Q2. Wintz Publishing House produces consumer magazines. The House and Home Division, which sells home-improvement and home-decorating magazines, has seen a 20% reduction in operating income over the past 9 months, primarily due to an economic recession and a depressed consumer housing market. The division's controller, Happy Franklin, has felt pressure from the CFO to improve her division's operating results by the end of the year. Franklin is considering the following options for improving the division's performance by year-end: (a.) Cancelling two of the division's least profitable magazines, resulting in the layoff of 25 employees. (b.) Selling the new printing equipment that was purchased in January and replacing it with discarded equipment from one of the company's other divisions. The previously discarded equipment no longer meets current safety standards. (c.) Recognizing unearned subscription revenue (cash received in advance for magazines that will be delivered in the future) as revenue when cash is received in the current month (just before fiscal year-end) instead of showing it as a liability. (d.) Recognizing advertising revenues that relate to January in December. Which of the forgoing "year-end" actions are clearly in conflict with the IMA Statement of Ethical Standards and should be viewed as unacceptable because of their potential harm to investors?

“I know headquarters wants us to add that new product line,” said Dell Havasi, manager of Billings Company’s Office Products Division. “But I want to see the numbers before I make any move. Our division’s return on investment (ROI) has led the company for three years, and I don’t want any letdown.”   Billings Company is a decentralized wholesaler with five autonomous divisions. The divisions are evaluated on the basis of ROI, with year-end bonuses given to the divisional managers who have the highest ROIs. Operating results for the company’s Office Products Division for this year are given below:   Sales $ 22,835,000 Variable expenses 14,297,200 Contribution margin 8,537,800 Fixed expenses 6,190,000 Net operating income $ 2,347,800 Divisional average operating assets $ 4,000,000   The company had an overall return on investment (ROI) of 17.00% this year (considering all divisions). Next year the Office Products Division has an opportunity to add a new product line that…

Faced with headquarters' desire to add a new product line, Stefan Grenier, manager of Bilti Products' East Division, felt that he had to see the numbers before he made a move. His division's ROI has led the company for three years, and he doesn't want any letdown. Bilti Products is a decentralized wholesaler with four autonomous divisions. The divisions are evaluated on the basis of ROI, with year- end bonuses given to divisional managers who have the highest ROI. Operating results for the company's East Division for last year are given below: Sales Variable expenses Contribution margin Fixed expenses Operating income Divisional operating assets The company had an overall ROI of 16% last year (considering all divisions). The new product line that headquarters wants Grenier's East Division to add would require an investment of $3,800,000. The cost and revenue characteristics of the new product line per year would be as follows: Sales Variable expenses Fixed expenses $ 11,400,000 $…

A successful franchise owner of a prestigious sporting goods chain is feeling the effects of technology, with more and more online sales and less and less customers in the shops. Locally there are three stores, and typically each store needs the following positions staffed for optimum profitability and success:  a store manager an assistant manager five department managers and 20 customer service representatives,  Averaging $1 200 000 in annual revenue. However, there has been a trend of 20 percent sales decline in stores, with an increase of 30 percent sales online (last year the online revenue stream was $300 000). The franchise owner was able to handle all of the online sales with a team of five full-time remote workers (working from home) last year.  The owner wants each store to maintain its productivity, which he measures as the revenue per employee. He also thinks that there is potential to grow the online business. Please help the owner by answering the following questions.…