Accounting 505 Week 6

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: Ethics and the Manager; Shut Down or Continue Operations

Marvin Braun had just been appointed vice president of the Great Basin Region of the Financial Services Corporation (FSC). The company provides check processing services for small banks. The banks send checks presented for deposit or payment to FSC, which then records the data on each check in a computerized database. FSC sends the data electronically to the nearest Federal Reserve Bank check-clearing center where the appropriate transfers of funds are made between banks. The Great Basin Region consists of three check processing centers in Eastern Idaho—Pocatello, Idaho Falls, and Ashton. Prior to his promotion to vice president, Mr. Braun had been manager of a check processing center in Indiana. Immediately upon assuming his new position, Mr. Braun requested a complete financial report for the just-ended fiscal year from the region's controller, Lance Whiting. Mr. Braun specified that the financial report should follow the standardized format required by corporate headquarters for all regional performance reports. That report appears below:

Financial Performance
Great Basin Region

Check Processing Centers
Total Pocatello Idaho Falls Ashton

Revenues $20,000,000 $7,000,000 $8,000,000 $5,000,000

Operating expenses:
Direct labor 12,200,000 4,400,000 4,700,000 3,100,000 Variable overhead 400,000 150,000 160,000 90,000 Equipment depreciation2,100,000 700,000 800,000 600,000 Facility expenses 2,000,000 600,000 500,000 900,000 Local administrative expenses* 450,000 150,000 180,000 120,000 Regional administrative

expenses* 400,000 140,000 160,000 100,000 Corporate administrative
expenses* 1,600,000 560,000...
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