MANAGERIAL ACCOUNTING 14Th Editionby GARRISON NOREEN BREWERCHAPTER 11

MANAGERIAL ACCOUNTING 14th Editionby GARRISON NOREEN BREWERCHAPTER 11

Internet Exercise #1

As you know, a company’s return on investment (or ROI) is the product of its margin and turnover. Financial analysts often compute and analyze a company’s ROI by obtaining the required data from its annual report. Unfortunately, the analyst is usually unable to determine the precise amounts of the company’s operating and nonoperating assets. Although this obstacle is a limitation, the information is still useful to some extent.

Search the Securities and Exchange Commission’s EDGAR corporate filings data base at for the annual report on Form 10-K of each of the two companies listed below.

Google Inc. (choose the one with the Standard Industrial Code (SIC) of 7370)
Yahoo Inc. (choose the one with the SIC of 7373)

Using data from the two most recent annual reports of these two companies, compute the margin, turnover, and ROI for each company for the two most recent fiscal years. After reviewing the ratios, briefly discuss each company’s performance, and then compare and contrast the performances of the two companies.

Solution

Depending on the years and companies chosen, students' answers will vary. However, students should show the basis of their calculations of ROI. Then, the instructor should evaluate the students' comments based on the calculations provided.

Internet Exercise #2

Determine which thirty stocks comprise the Dow-Jones Industrial Average by completing an Internet search. Choose three of the companies included in the average and perform the following for each of the three companies:

Locate the company’s most recent annual report.
(Note: For most of the companies listed in the Dow-Jones Industrial Average, the website for the company will often be the company's name followed by ".com"—for instance, Alcoa's website can be found at Once in the company's website you can often access financial information by looking for the Annual Report, often listed in the Investor Relations or Investor Info section. If you cannot find the information needed, try getting the financial information filed with the Securities and Exchange Commission by going to the SEC's information website at
Calculate the company's return on investment (ROI) for the last two years, using a fairly simple calculation such as operating income divided by total assets. (Show your work.) Try to determine, by reference to the Form 10-K, why the company’s ROI has recently changed significantly, if appropriate.
Compare and contrast your findings (among the three companies).

Solution

Internet Exercise #3

The Balanced Scorecard Institute includes client testimonials and success stories on its website at The Institute helps a diverse range of commercial, government and nonprofit organizations develop balanced scorecard and performance management systems. It also recognizes best practices in balanced scorecard (BSC), strategic performance management and measurement, and transformation and change management. Mecklenburg County was awarded the Institute’s highest award for Excellence in 2008. To learn how, scroll down the Client Testimonials and Success Stories navigation bar in the right-hand navigation bar and click on the Mecklenburg County logo. Then, click on the Read the Case Study link in the box that pops us. Read about how this county’s customer focus positioned it for a tough economy. Write a brief paper (3 - 5 paragraphs) that summarizes this success story.

Solution

During 2001, Mecklenburg County adopted its vision: “By 2015, we will be a community of price and choice for people to live, work, and recreate.”
A customer-focused management approach driven by results and implementation of a balanced scorecard to measure those results was then adopted.
By the end of 2008, the county had achieved over 50% of its goals for 2015 and improved performance in almost 20% of its remaining goals.
In the past, in response to downturns in the economy, the county implemented across-the-board cuts and eliminated vacant positions.
Now, decisions are made only after the impact on the service to county residents and on the county’s long-term goals have been considered.

Internet Exercise #4

Perform an Internet search using the term, economic value added, and locate an article (less than one year old) from the results of your search. (Make sure that you do not select an instructor’s lecture notes or a class assignment from the results of your search.) After reading the article, write a brief paper (3 – 5 paragraphs) that summarizes and comments on the article. (Your paper should provide the appropriate citation(s). If necessary, you may wish to refer to the following website, which includes information about citations:

Solution

The article chosen by the student will determine the appropriate answer to this assignment. The instructor should grade the papers based on the student’s fulfillment of the requirements, with particular attention to their summary and/or critique of the article, the student’s proper citation of the article chosen, and compliance with the general length guideline provided (that is, 3 – 5 paragraphs).

Internet Exercise #5 (Appendix 11A)

The Controller’s Office of Creighton University sets forth policies and procedures for service center operations on its website at Review the related information provided on this website. (Find it by clicking on the Policies and Procedures Manual link in the right-hand navigation bar, then on the Cost Accounting Policies link, and finally on the Service Center Operations link.) Then, write a brief paper (4 paragraphs) that answers each of the following questions.

What is the purpose of these policies and procedures, and why is there a need for these formal written policies and procedures?
How does Creighton define a service center, and why does the Controller’s Office feel the need to formally define a service center?
Do Creighton's service centers attempt to make a profit? What is the policy with regards to transactions with entities outside the University?
Why does Creighton have a policy on establishing a service center? Why is there a need for such a policy, and what approvals are required?

(Your paper should provide the appropriate citation(s). If necessary, you may wish to refer to the following website, which includes information about citations:

Solution

The purpose of the policy is to provide a framework for the fiscal operations of the University and help ensure compliance with sound accounting principles and governmental regulations. The policy also helps to provide support for activities that are good business practices and consistent with the University's mission.
A service center is an organization that provides goods or services to the University that are not readily available from external sources. The organization also charges a rate designed to recover the full allowable costs of the goods and services provided. The formal definition is important to help ensure knowledge of applicable policies and regulations related to the service centers.
The service centers are to bill for their goods and services provided to others on a breakeven basis, with up to 5% variance per year allowed. External business is to be kept at a minimum, and the external users may be charged for costs not allowed for internal or Federal users.
When an organization determines a need for a new service center, approval is required in order to ensure the new service center is established according to policies and regulations. In the approval process, the purpose and justification of a new service must be documented, along with the budget and billing rate computation. This enables those in approval positions to review the propriety new service center requests.