Analyze Bern’s situation and assess any potential internal control issues and exposures. Discuss somepreventive measures this firm may wish to implement.
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Bern Fly Rod Company is a small manufacturer of high-quality graphite fly-fishing rods. It sells itsproducts to fly-fishing shops throughout the United States and Canada. Bern began as a small companywith four salespeople, all family members of the owner. Due to the high popularity and recent growth offly-fishing, Bern now employs a sales force of 16, and for the first time employs nonfamily members. Thesalespeople travel around the country giving fly-casting demos of their new models. Once the salesorders are generated, inventory availability is determined and, if necessary, the salesperson sends theorder directly to the manufacturing department for immediate production. Sales staff compensation is tieddirectly to their sales figures. Bern’s financial statements for the December year-end reflectunprecedented sales, 35 percent higher than last year. Further, sales for December account for 40percent of all sales. Last year, December sales accounted for only 20 percent of all sales
Analyze Bern’s situation and assess any potential internal control issues and exposures. Discuss somepreventive measures this firm may wish to implement.
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- Bern Fly Rod Company is a small manufacturer of high quality graphite fly-fishing rods. It sells its products to fly-fishing shops throughout the United States and Canada. Bern began as a small company with four salespeople, all family members of the owner. Because of the high popularity and recent growth of fly-fishing, Bern now employs a seasonal, nonfamily, sales force of 16.The salespeople travel around the country giving flycasting demonstrations of their new models to fly-fishing shops. When the fishing season ends in October, the temporary salespeople are laid off until the following spring.Once the salesperson takes an order, it is sent directly to the cash disbursement department, where commission is calculated and promptly paid. Sales staff compensation is tied directly to their sales (orders taken) figures. The order is then sent to the billing department, where the sale is recorded, and finally to the shipping department for delivery to the customer. Sales staff are also…Wheels, Inc. is a manufacturer of bicycles sold through retail bicycle shops in the southeastern United States. The company has two salespeople who do more than just sell the products-they manage relationships with the bicycle shops to enable them to better meet consumers' needs. The company's sales reps visit the shops several times per year, often for hours at a time. The owner of Wheels is considering expanding to the rest of the country and would like to have distribution through 4000 bicycle shops. To do so, however, the company would have to hire more salespeople. Each salesperson earns $40000 plus 2 percent commission on all sales. Another alternative is to use the services of sales agents instead of its own salesforce. Sales agents would be paid 4 percent of sales. Each sales call lasts approximately 1.7 hours, and each sales rep has approximately 1360 hours per year to devote to customers. Wheels needs 10 salespeople if it has 4,000 bicycle shop accounts that need to be…Wheels, Inc. is a manufacturer of bicycles sold through retail bicycle shops in the southeastern United States. The company has two salespeople that do more than just sell the products—they manage relationships with the bicycle shops to enable them to better meet consumers’ needs. The company’s sales reps visit the shops several times per year, often for hours at a time. The owner of Wheels is considering expanding to the rest of the country and would like to have distribution through 1,000 bicycle shops. To do so, however, the company would have to hire more salespeople. Each salesperson earns $40,000 plus 2 percent commission on all sales. Another alternative is to use the services of sales agents instead of its own sales force. Sales agents would be paid 5 percent of sales. Refer to Appendix 2 to answer this question. Determine the number of salespeople Wheels needs if it has 1,000 bicycle shop accounts that need to be called on four times per year. Each sales call lasts…
- Wheels, Inc. manufactures bicycles sold through retail bicycle shops in the southeastern United States. The company has two salespeople that do more than just sell the products—they manage relationships with the bicycle shops to enable them to better meet consumers’ needs. The company’s sales reps visit the shops several times per year, often for hours at a time. The owner of Wheels is considering expanding to the rest of the country and would like to have distribution through 1,000 bicycle shops. To do so, however, the company would have to hire more salespeople. Each salesperson earns $40,000 plus 2 percent commission on all sales annually. Another alternative is to use the services of sales agents instead of its own sales force. Sales agents would be paid 5 percent of sales. At what level of sales would it be more cost efficient for Wheels to use to sales agents compared with its own sales force? To determine this, consider the fixed and variable costs for each alternative. What are…Wheels, Inc. manufactures bicycles sold through retail bicycle shops in the southeastern United States. The company has two salespeople that do more than just sell the products—they manage relationships with the bicycle shops to enable them to better meet consumers’ needs. The company’s sales reps visit the shops several times per year, often for hours at a time. The owner of Wheels is considering expanding to the rest of the country and would like to have distribution through 1,000 bicycle shops. To do so, however, the company would have to hire more salespeople. Each salesperson earns $40,000 plus 2 percent commission on all sales annually. Another alternative is to use the services of sales agents instead of its own sales force. Sales agents would be paid 5 percent of sales. Determine the number of salespeople Wheels needs if it has 1,000 bicycle shop accounts that need to be called on four times per year. Each sales call lasts approximately 2.5 hours, and each sales rep has…Wheels Inc. is a manufacturer of bicycles sold through retail bicycle shops in the southeastern United States. The company has two sales people that do more than just sell the product-they manage relationships with the bicycle shops to enable them to better meet the consumers' needs. The company's sales reps visits the shop several times per year, often for hours at a time. The owner of wheels is considering expanding to the rest of the country and would like to have distribution through 1000 bicycle shops. To do so, Howe the company would have to hire more salespeople. Each sales person earn $40,000 plus 2 percent commission on all sales. Another alternative is to use the services of sales agents instead of its own sales force. Sales agents would be paid 5 percent of sales. a) determine the number of sales people Wheels need if it has 1000 bicycle shop accounts that need to be called on four time per year. Each sales call lasts approximately 2.5 hours, and each sales rep has…
- Marketing: Wheels, Inc. manufactures bicycles sold through retail bicycle shops in the southeastern United States. The company has two salespeople that do more than just sell the products dash– they manage relationships with the bicycle shops to enable them to better meet consumers' needs. The company's sales reps visit the shops several times per year, often for hours at a time. The owner of Wheels is considering expanding to the rest of the country and would like to have distribution through 600 bicycle shops. To do so, however, the company would have to hire more salespeople. Each salesperson earns $40,000 plus 2 percent commission on all sales annually. Another alternative is to use the services of sales agents instead of its own sales force. Sales agents would be paid 5 percent of sales. Determine the number of salespeople Wheels needs if it has 600 bicycle shop accounts that need to be called on five times per year. Each sales call lasts approximately 3 hours and each sales…The Toledo Shirt Company manufactures men’s shirts sold to department stores and other outlets throughout Ohio, Illinois, and Indiana. For the past 14 years, one of Toledo’s major customers has been Abraham and Sons, a chain of nine stores selling men’s clothing. Mr. Abraham retired 18 months ago and his two sons took complete control of the organization. Since that time, they have invested significant sums of money in an attempt to expand each store by also selling women’s clothing. Success in this new market has proven to be difficult. Abraham and Sons is not known for selling women’s clothing, and no one in the company has much expertise in the area.Approximately seven months ago, James Thurber, Toledo’s chief financial officer, began to notice that Abraham and Sons was taking longer than usual to make payments. Instead of the normal 30 days, the retailer was taking 45 days—and frequently longer—to pay each invoice. Because of the amount of money involved, Thurber began to monitor…Lesters Rentals is located in Cincinnati, Ohio. The company rents party equipment such as tents, tables, chairs, linens, and china for small occasions and large weddings. They also rent a variety of home improvement tools and contractor equipment including generators, grinders, power hammers, and drills. The company serves approximately 5,000 repeat customers and has more than 1,200 different inventory items for rent in stock. Lesters purchases replacement stock from 45 different vendors. Each vendor supplies different items, but Lestors may purchase the same item from different vendors. Other business rules include (1) each inventory type has multiple quantities on hand (2) customers use their telephone numbers to uniquely identify themselves for rentals; (3) customers may rent more than one item of the same type. Required Create a normalized data model for Lesters Rentals. Include the primary keys, data attributes, and foreign keys.
- TruGreen is the worlds largest lawn and landscape company, employing over 10,000 employees and serving more than 1.7 million customers. The Pawtucket Red Sox is a minor league baseball affiliate of the Boston Red Sox. The teams current roster consists of 25 active players, along with the teams manager, coaches, and mascots. Hock It To Me is a privately owned pawn shop. The company has annual revenue of less than 500,000 and employs a staff of one to four people. Even though each of these businesses has a unique payroll due to different amounts of salaries or wages, benefits, and withholdings, explain why each business needs to (a) accurately calculate the amount of payroll for each employee, (b) determine the amount of payroll taxes for which the employer is liable, (c) make the payroll tax deposits as required, and (d) file the appropriate payroll tax returns on a timely basis.Posavek is a wholesale supplier of building supplies building contractors, hardware stores, and home-improvement centers in the Boston metropolitan area. Over the years, Posavek has expanded its operations to serve customers across the nation and now employs over 200 people as technical representatives, buyers, warehouse workers, and sales and office staff. Most recently, Posavek has experienced fierce competition from the large online discount stores. In addition, the company is suffering from operational inefficiencies related to its archaic information system. Posavek revenue cycle procedures are described in the following paragraphs. Revenue Cycle Posaveks sales department representatives receive orders via traditional mail, e-mail, telephone, and the occasional walk-in customer. Because Posavek is a wholesaler, the vast majority of its business is conducted on a credit basis. The process begins in the sales department, where the sales clerk enters the customers order into the centralized computer sales order system. The computer and file server are housed in Posaveks small data processing department. If the customer has done business with Posavek in the past, his or her data are already on file. If the customer is a first-time buyer, however, the clerk creates a new record in the customer account file. The system then creates a record of the transaction in the open sales order file. When the order is entered, an electronic copy of it is sent to the customers e-mail address as confirmation. A clerk in the warehouse department periodically reviews the open sales order file from a terminal and prints two copies of a stock release document for each new sale, which he uses to pick the items sold from the shelves. The warehouse clerk sends one copy of the stock release to the sales department and the second copy, along with the goods, to the shipping department. The warehouse clerk then updates the inventory subsidiary file to reflect the items and quantities shipped. Upon receipt of the stock release document, the sales clerk accesses the open sales order file from a terminal, closes the sales order, and files the stock release document in the sales department. The sales order system automatically posts these transactions to the sales, inventory control, and cost-of-goods-sold accounts in the general ledger file. Upon receipt of the goods and the stock release, the shipping department clerk prepares the goods for shipment to the customer. The clerk prepares three copies of the bill of lading. Two of these go with the goods to the carrier and the third, along with the stock release document, is filed in the shipping department. The billing department clerk reviews the closed sales orders from a terminal and prepares two copies of the sales invoice. One copy is mailed to the customer, and the other is filed in the billing department. The clerk then creates a new record in the accounts receivable subsidiary file. The sales order system automatically updates the accounts receivable control account in the general ledger file. CASH RECEIPTS PROCEDURES Mail room clerks open customer cash receipts, reviews the check and remittance advices for completeness, and prepares two copies of a remittance list. One copy is sent with the checks to the cash receipts department. The second copy of the remittance advices are sent to the billing department. When the cash receipts clerk receives the checks and remittance list, he verifies the checks received against those on the remittance list and signs the checks For Deposit Only. Once the checks are endorsed, he records the receipts in the cash receipts journal from his terminal. The clerk then fills out a deposit slip and deposits the checks in the bank. Upon receipt of the remittances, the billing department clerk records the amounts in the accounts receivable subsidiary ledger from the department terminal. The system automatically updates the AR control account in the general ledger Posavek has hired your public accounting firm to review its sales order procedures for internal control compliance and to make recommendations for changes. Required a. Create a data flow diagram of the current system. b. Create a system flowchart of the existing system. c. Analyze the physical internal control weaknesses in the system. d. (Optional) Prepare a system flowchart of a redesigned computer-based system that resolves the control weaknesses that you identified. Explain your solution.Eat-n-Run Inc. owns and operates 10 food trucks (mobile kitchens) throughout metropolitan Los Angeles. Each food truck has a different food theme, such as Irish-Mexican fusion, traditional Mexican street food, Ethiopian cuisine, and Lebanese-Italian fusion. The company was founded three years ago by Juanita OBrien when she opened a single food truck with a unique menu. As her business has grown, she has become concerned about her ability to manage and control the business. OBrien describes how the company was built, its key success factors, and its recent growth: I built the company from the ground up. In the beginning, it was just me. I drove the truck, set the menu, bought the ingredients, prepared the meals, served the meals, cleaned the kitchen, and maintained the equipment. I made unique meals from quality ingredients and didnt serve anything that wasnt perfect. I changed my location daily and notified customers of my location via Twitter. As my customer base grew, I hired employees to help me in the truck. Then one day I realized that I had a formula that could be expanded to multiple trucks. Before I knew it, I had 10 trucks and was hiring people to do everything that I used to do by myself. Now, I work with my team to build the menu, set daily locations for the trucks, and manage the operations of the business. My business model is based on providing the highest-quality street food and charging more for it than other trucks. You wont get the cheapest meal at one of my trucks, but you will get the best. The superior quality allows me to price my meals a little bit higher than the other trucks. My employees are critical to my success. I pay them a better wage than they could make on other food trucks, and I expect more from them. I rely on them to maintain the quality that I established when I opened my first truck. Things are going great, but Im feeling overwhelmed. So far, the growth in sales has led to a growth in profitabilitybut Im getting nervous. If quality starts to fall off, my brand value erodes, and that could affect the prices that I charge for my meals and the success of my business. Create balanced scorecard metrics for Eat-n-Run Inc. Identify whether these measures best fit the learning and growth, internal processes, customer, or financial performance perspective of the balanced scorecard.
