The Present Economic Sitation Has Had a Negative Effect On the Essay

The Present Economic Sitation Has Had a Negative Effect On the Community - Essay Example While relative to the specific community, it’s clear that a great amount of communities have encountered increased crime rates as a direct result of the economic recession. Consider a recent report that indicated, â€Å"Of 233 police agencies surveyed by the Police Executive Research Forum†¦44 percent reported a rise in certain types of crime they attributed to the United States worst economic and financial crisis in decades† (Colvin). In these regards, it’s clear that because of the tight economic situation, increased amount of individuals have resorted to crime. The ultimate result is a strong negative effect on communities. Another major negative effect the economic recession has had on communities is neighborhood blight. One of the core causes of the economic recession was the collapsing housing market. The collapse in the house market resulted in a strong negative impact on communities. Increasing amount of individuals found that they could not pay their mortgages and subsequently defaulted on their loans. The result of this was neighborhoods with high amount of abandoned homes. Consider that â€Å"Very few in the multifamily sector  did not experience high vacancy factors from 2007 to 2009† ("GreenLandlady"). In these regards, there is a direct cause and effect relationship between the economic recession, increased vacancy factors, and urban blight. The cumulative effect of these elements has a significant negative impact on communities. The final negative effect the current economic situation has had on communities is general social malaise. This understanding considers that the economic recession has caused a great amount of people to lose their jobs. This aspect of the recession has had a fall-out effect, reducing the amount of independent businesses that are able to successful operate in the community and leading individuals to increasingly

I have a school project where i have to speak its like a presentation Assignment

I have a school project where i have to speak its like a presentation. I am assigned senior judge - Assignment Example A contract case law that better explains this argument is the Lesotho Highlands Development Authority vs. Impregilo spA. In the case, the World Bank financed the construction of the Lesotho Highlands Water Project, and this included the construction of the Katse dam in 1991. My Lords, in 1998, a dispute arose between the clients, the Lesotho Highlands Development Authority, and the contractor. This is because of other unexpected labor costs brought by the Highland Water Venture (Hood, 31). In October 2001, the issue was brought before an arbitration tribunal. In 2002, the tribunal ruled in favor of Highland Water Venture and gave an award of more than 6 million pounds. However, the Lesotho Highlands water project challenged the decision of the tribunal in an English court, under the arbitration act, section 67 and 68. They argued that the arbitrators exceeded their authority in respect to the amount awarded, and the currency in which the award was made. The appeal was allowed in a court, and in November 2002, the commercial court ruled that the tribunal violated section 68 of the arbitration act. My Lords, part 3 (a), and (d) of the 1996 section 69 of the arbitration act allows this court of appeal to settle this dispute. Part 3 (a) denotes that an individual can seek the intervention of the court of appeal if the nature of conflict, and the resolution of the same conflict be a lower court will affect the rights of all parties concerned. In this dispute between the University of East England, and Ms. Edwards, the issue under challenge is whether the University is liable in case of negligence by its staff which results to loss or damage of the student’s property. On this note, this case needs to examine on whether the contract signed by Ms. Edwards breaks the Unfair Contract Act of 1977. b) Students residing in the University

Financial Reporting Techniques and Methods

Financial Reporting Techniques and Methods Introduction Over the course of the last few decades there has been considerable discussion and debate regarding financial reporting and, in particular, the appropriate measurement basis that should be implemented for use with a corporation’s financial statements. During this period international accounting standard bodies have been endeavouring to develop an agreed standard conceptual framework that is acceptable by all accounting regulatory bodies for use in financial statement, irrespective of the corporation and its country of domicile, and one that identifies the items to be included within the statements and the manner in which these should be measured (Johnson 2004). The intention is to avoid a situation where there are numerous differing standard of financial reporting in operation within the global market place (Bullen and Crook 2005, p.5). However, attempts to achieve this international consensus, specifically in terms of the measurement basis used, has not been universally accepted, with many divergence of views on the subject emerging from corporate management, the accounting profession and the users of financial statements. As the ICAEW (2006, p.5), commented in their recent report, â€Å"Current measurement practices are complex, diverse and apparently inconsistent. There is clearly at least a case for something more consistent and, presumably, simpler.† The difficulty remains that arriving at such a simplistic resolution needs to address the fact that many elements of measurement within accounting processes are subject to judgment, convention and estimation (ICAEW 2006, p.20). The purpose of this paper is to analyse the various measurement basis currently in use and evaluate their advantages and disadvantages and, as a result of this analysis attempt to identify the areas that required further consideration prior to the requirements for measurements being embodied within a revised international conceptual framework. However, to provide some background on this issue, it is considered necessary to firstly understand the purpose of financial statements, in terms of those who use them and their needs to facilitate that usage. Users of Financial Statements Whilst in terms of publicly quoted companies the main users are seen as management, investors and analysts, there are a number of other groups that use financial statements for a range of purposes. These include the business employees, its lenders and suppliers, governmental departments and, in some cases, members of the public (IFP 2006). Each of these groups have different needs which the financial statements need to address when considering the measurement base they are going to employ, dependent upon which group these reports are being targeted at. In terms of investors, analysts and those generally involved with the global capital markets and stock exchanges, their need is for reliable and accurate information upon which they can base economic decisions (Gregoriou and Gaber p.16 and p.64). Furthermore it is important to this group that the monetary information provided reflects a current and fair value of the business and its relevant information. Governments and regulatory bodies have similar needs in relation to assessing the financial position and results of a business, in their case the purpose is to evaluation economic decisions such as potential taxation revenue from which they will be able to assess the state of the national economy and public spending levels. Other users groups identified, which include employees, suppliers and lenders, approach financial statements in a slightly different manner, with their focus on using the financial statements to assess the corporations potential impact upon their lives and businesses. For example, a supplier or lender is unlikely to conduct business with a corporation whose financial statements show lack of liquidity or cash flow difficulties. Similarly, employees wish to assure themselves that a) their pensions are protected and b) that their employment is with a financially secure business. In other words their needs relate more to the physical tangible and immediately realisable assets such as cash, rather than less relevant â€Å"fair value† aspects of the statements. However, historically management have been more reluctant to provide these groups with financial accounting data (Purdy 1978), although corporate governance regulations have eliminated much of their control over such matters. Whilst there ate differing purposes for which these groups need financial statements, and they may value certain measurements bases more than others, as Johnson (2004) accurately stated, the basic need of all the users is wealth. Just as Investors and capital market players are looking to protect and increase their wealth, so to are governments, employees, lenders and suppliers. In reality it is the user who is benefited by improvements in the quality of the reporting standards more than the company itself (Langendijk et al 2003, p.194) and they need to be assured that the statements provided by corporations that they are involved with show an accurate and truthful position of the business that they can rely upon to make informed judgements relating to their individual needs. Measurement Bases for Financial Statements Over the decades there have been a number of measurement bases used for financial reporting purposes and his reports focuses upon those that are considered the most important of these methods. Historical Cost In the past the historical cost reporting method has been the predominant choice for financial reporting, favoured by many because it is more factually based and therefore considered to be â€Å"more transparent† (Langendijk et al 2003, p.74 and p.329). The basis of historical cost measurement is that a monetary item can be identified by the actual price paid for an item purchased or received from an item sold, whether these relate to revenue and expenditure items or assets and liabilities. Therefore, if a business purchases an item of equipment for  £10,000, that is the fiscal amount that will appear within its balance sheet. The historical cost measurement, whilst it takes into account the loss of value of an asset, for example by depreciating the value of a motor vehicle over its perceived useful life, does not take into account any potential increase in the value of an asset until the date the asset has been sold. Therefore, if the business owns a property, which is known generally to be an appreciating asset, under the historical cost method, this property will appear in the balance sheet at cost until it is subsequently sold. Therefore it is apparent that any true gain or loss made on such assets will not be accounted for until the time of sale. Similarly, assets and liabilities that have no cost, such as internally developed software that can be sold, as they do not have a unit value will not appear as within the company’s financial statements using this method of measurement. With regard to income, the purpose of the historical cost method is to link costs expended with revenue that is generated at the same time (ICAEW 2006, p.23). Current Cost – Value to the Business In essence current cost measurement, of value to the business, as it is sometimes known, is based upon the concept of â€Å"physical capital maintenance† (Gregoriou and Gaber 2006, p.132). In other words as Gregoriou and Gaber (2006) state in the same passage â€Å"a periods income is positive only if the depreciation amount based on current cost is earned.† The basic premise of this measurement is an attempt to calculate â€Å"how much worse off a business would be if it were deprived of an asset† (ICAEW 2006, p.24). The reverse is also true in that with a liability it is necessary to ascertain how much better off a business would be if the said liability were removed from the business. The core measurement in this case is predominantly based upon including within the financial statements the current replacement cost of the asset and to this extent, unlike the historical cost method it recognises the gain or loss to the business within the period of the statements rather than at some later date. Furthermore, the value to the business method takes into account the serviceable quality of the asset when comparing the asset held against the value of a replacement asset of the same specification. Current cost measurement is designed to provide a measurement of opportunity cost of a business, which some researchers, such as Edwards et al (1987, p.10) have regarded as the only correct manner to measure the true profit and capital. Realisable Value IFP[1] (2006, p.28) define net realisable value as the â€Å"selling price of the item in the ordinary course of business.† Although similar to the historical, current cost and fair value measurement methods in some respects, the realisable value method focuses upon the price at which an asset can be sold, or the cost at which a liability can be cleared. The realisable value measurement also includes, in the majority of cases, the costs that are attached to that sale or settlement. Therefore it will record the net monetary result of the transaction, for example settlement of a liability will be shown as the cost of settling the debt and any costs that are incurred within that process, such as commissions or interest payable. Similarly, with assets the sale price reflected will be net of such costs as commissions and associated costs. Realisable value is considered by some to reflect the value that might attach to a business in the event of a forced sale, for example in the case of liquidation. Others, such as the ISAB[2] (ISAB 2) view it as an â€Å"entity-specific† form of measurement, which differentiates its focus from that of the fair-value method of measurement. Fair Value The fair value measurement basis is perhaps the most difficult model to describe, although it is currently the method favoured by the majority of the international standards board. The primary target of this method â€Å"extends to non-financial items† and is directed at the â€Å"valuation of assets and liabilities in the balance sheet† (Langendijk et al 2003, p.22 and p.108). The ISAB (2006, p.12) paper states, â€Å"the objective of fair value measurement is to reflect the market value of an asset† with the reporting statements. Where this is not possible, because such a market does not exist then an estimate should be used based on what would be considered to be the value if a market was available for the asset. Thus, when preparing the financial statements, if the fair value method is being used, it is incumbent upon the management and their auditors to seek and report independent valuations in respect of the assets and liabilities that will be recorded in the corporation’s balance sheet. In practice therefore, fair value is based upon an exit value approach (ICAEW 2006, p.29) to monetary recording, although the international standard regulatory body (ISAB) does allow for the use of other measurement methods where â€Å"fair value† is not deemed feasible or appropriate. In reality corporations have a tendency in practice to utilise a combination of the measurement bases depending upon the monetary item being recorded and the differences that occur in terms of their individual industry, business size and structure (ICAEW 2006, p.3). Furthermore, as can be seen from the ICAEW (2006) discussion paper, there is an element of inter-relationship between them, which provides for additional complication. Advantages and Disadvantages Generally it is agreed that, irrespective of the method of measurement used, all of the methods have a certain degree of uncertainty and the need for estimation, although the intention is for such estimations to be based on factual information available on the date the measurement takes place (ISAB 2006, p.12). However, as outlined below, there are some significant advantages and disadvantages that attract to each of the measurement bases that are discussed within the previous section of this report. One of the fundamental benefits of this measurement method is its conservative approach to financial reporting. This is beneficial in that: It reduces the risk of unrealised future gains, which may not transpire, being distributed to shareholders in advance of the event, thereby protecting lenders and creditors. Reported profits are lower (IFP 2006, 310), which has taxation benefits in that tax is not payable upon income that has not been realised. Furthermore, management incentive schemes are unable to take advantage of profits shown though other methods that may not materialise. Less opportunity for use of inflated valuations. Another advantage that attracts to historical cost is that it is more in tune with the information that the business managers use, and indeed their processes of financial recording systems and, for some users will be more relevant to the business and, as such is an objective measurement of values (IFP 2006 p.33). In terms of the inherent disadvantages of this method, some critics view its historical nature as being the major drawback because: The information contained is out of date and therefore cannot be relied upon to give an accurate worth. The lack of value appreciation leads to an understating of the business worth and asset value. The difference between historical and current values is misleading for investors and analysts (ICAEW 2006, p.8). Current Cost – Value to the Business The major advantage that attracts to the current cost method is the relevance that it has to users of the information outside of the business management. By its nature this method provides: Competitors with an idea of the costs of new entry to the specific corporations industry market place. Regulatory bodies can use the information to assess whether there is fairness being exercised in terms of competitive advantage. Potential investors are more able to ascertain the business operational capacity on an ongoing basis. Furthermore, it is perceived by many observers that the relevance of each individual asset or liability being measured in this manner is advantageous because it provides a better overall view of the business. The reverse view of this method is based upon a number of points, the main one being the fact that the purpose of management is the maintenance of profit and increase in shareholder value, and that this does not relate to the operating capital. It is more important in this respect to increase the wealth that stakeholders receive from their investment, by achieve better returns on resources, than it is to concentrate upon operating capital. It is also considered that the rapid changes currently occurring within the market place and the pace of advancement in modern technologies negates the perceived advantages that potential new entrants gain from the this method. Realisable Value Realisable value is attractive to some users, particularly investors and vendors, because of its accuracy in denoting and reflecting the net cash position from the realisation of an asset or liability. Therefore: They are not misled into making decisions based upon monetary information that has not taken into account contractual costs attached to the sale or settlement of a balance sheet item. It becomes easier to ascertain the ongoing prospects of the business. For example, one can decide on the basis of realisable value, when a business is approaching a position of no longer being seen to be a going concern. As with current cost and fair value, the disadvantages of this method are that it does not directly relate to the information that the business management uses on a regular basis and, additionally, it relies upon a degree of estimation that is calculated according to the judgement of the business advisors, which may or may not come to fruition in the amounts submitted. Thus the position indicated within the statements may not be sustainable (ICAEW 2006, p.33). There are many academics, economists and other observers who believe that fair value is the most appropriate measurement for use in financial account, but equally there are those who disagree with this view (Langendijk et al 2003, p.52). Those who support the fair value approach claim that it is beneficial to certain user groups, including investors and lenders in that its application to individual and separate assets and liabilities gives a number of benefits: Provides a measure of the realisable value of the asset worth on disposal. More accurately identifies which assets could be sold without adversely affecting the business activity and future success. It saves the user considerable time, effort and cost in having to recalculate figures contained within other methods of valuation. Those who disagree with this measurement state that it is irrelevant to the actual intention of the business management in that the fact that the item is included within the financial statements indicates that there was no intention to sell at that time. Similarly, those in disagreement argue that, in the majority of cases, separating assets in a sales situation produces a lower return for the business than a sale containing an amalgam of asset sales is likely to return. For example, the sale of a part of a business specific revenue asset would produce a lesser price than the sale of the total assets that contribute to that asset stream. Thus it has the effect of depreciating rather than enhancing shareholder and business value. The other difficulty that is perceived to attach itself to fair value is the variety of ways in which it can be calculated and the various treatments that are used (ICAEW 2006, p.9). Improvement to conceptual framework Both of the major accounting standard boards, ISAB and FSAB[3] are aware that the existing conceptual framework for financial reporting requires improvement (Gregoriou and Gaber 2006, p.101) and that it is important that the information that these produce relating to corporations is â€Å"complete and free from error and bias† (IFP 2006, p.21). However, there are a number of areas that need to be investigated further to ensure that the revised conceptual framework envisaged is an improvement on the existing situation. The most important of these is clarification of the information that needs to be included or omitted from the financial reports and, additionally, if inclusive how and where it should be presented (Bullen and Crook 2005, p.13). At present the framework classification is not extensive enough to eradicate confusion. Furthermore, there remains at present some ambiguity in relation to the definition of the control and terminology with relation to â€Å"assets† and â€Å"liability† (Bullen and Crook 2005, p.12). Similarly, a more constructive approach to the measurement bases needs to be taken. In this respect the conceptual framework needs to more precisely identify which measurements would be appropriate for each particular item that appears within the financial statements. Failure to address this leaves an element of uncertainty, which can be damaging for both business managers and those who use and rely upon the reports. Additionally, in our opinion, there remains the problem of compatibility. There is no doubt that it is necessary to endeavour to achieve a standard of reporting that is acceptable to all of the business stakeholders, which includes the management and users who rely upon these statements. At present, as can be evidenced by the continuing debate on this subject, that harmony between the parties involved is not being met. Conclusion From the research that has been conducted in the preparation of this paper, it is the opinion of the author that there is a need for a revision of the international conceptual framework. In addition, it is also considered that the measurement bases to be used within this need to be more clearly defined. In the author’s opinion, one important and central point that it is felt necessary to take into account is that, in effect, all financial statements are historical at the time they are released. The rapidity of change that occurs within the market place and in new technology development means that factual, opinion based and estimated information contained within the financial statements is historical at the moment of publication. Therefore it is necessary to temper any improvements to the framework being considered against this premise. Bibliography Bullen, Halsey. S and Crook, Kimberley (2005). Revisiting the concepts. Retrieved 24 June 2007 from http://www.fasb.org/articlesreports/revisiting_the_concepts_may_05.pdf Edwards, Jeremy., Kay, John and Mayer Colin (1987). The Economic Analysis of Accounting Profitability. Clarendon Press. Oxford, UK. Gregoriou, Greg. N and Gaber, Mohamed (eds) (2006). International Accounting: Standards, Regulations, Financial Reporting. Butterworth-Heinemann Ltd. Oxford, UK. ICAEW (2006). Measurement in Financial Reporting. Institute of Chartered Accountants in England and Wales. Retrieved 25 June 2007 from http://www.icaew.com/index.cfm?route=142887 IFP (2006). Financial Reporting. International Financial Publishing Ltd. Guildford, UK ISAB (2006). Measurement Bases for Financial Accounting Measurement on Initial Recognition. Canadian Accounting Standards Board. Retrieved 23 June 2007 from http://www.iasb.org/NR/rdonlyres/E1A542DB-3A19-47AC-B995-EFCFA044F3EC/0/MeasurementBasesforFinancialAccountingDPfullversion.pdf Johnson, L. Todd (2004). The project to revisit the conceptual framework. The FASB Report, Dec 2004. Retrieved 25 June 2007 from http://www.fasb.org/articlesreports/project_revisit_cf_tfr_dec2004.pdf Johnson, L. Todd (2004). Understanding the conceptual framework. The FASB Report, Dec 2004. Retrieved 25 June 2007 from http://www.fasb.org/articlesreports/project_revisit_cf_tfr_dec2004.pdf Langendijk, Henk., Swagerman, Dirk and Verhoog, Willem (eds) (2003). Is Fair Value Fair?: Financial Reporting from an International Perspective. John Wiley Sons Ltd. Chichester, UK. Purdy, D.E., (1978). The Information Requirements of Employees. City of London Polytechnic. London, UK. Footnotes [1] International Financial Publishing [2] International Standards Accounting Board [3] Federal Accounting Standard Board (US).

Brave New World Essay -- essays research papers

Summary: Chapter 1 The novel opens in the Central London Hatchery and Conditioning Centre. The year is a.f. 632 (632 years â€Å"after Ford†). The Director of Hatcheries and Conditioning is giving a group of students a tour of a factory that produces human beings and conditions them for their predestined roles in the World State. He explains to the boys that human beings no longer produce living offspring. Instead, surgically removed ovaries produce ova that are fertilized in artificial receptacles and incubated in specially designed bottles. The Hatchery destines each fetus for a particular caste in the World State. The five castes are Alpha, Beta, Gamma, Delta, and Epsilon. Gamma, Delta, and Epsilon undergo the Bokanovsky Process which involves shocking an egg so that it divides to form up to ninety-six identical embryos, which then develop into ninety-six identical human beings. The Alpha and Beta embryos never undergo this dividing process, which can weaken the embryos. The Director explains that the Bokanovsky Process facilitates social stability because the clones it produces are predestined to perform identical tasks at identical machines. The cloning process is one of the tools the World State uses to implement its guiding motto: â€Å"Community, Identity, Stability.† The Director goes on to describe Podsnap’s Technique which speeds up the ripening process of eggs within a single ovary. With this method, hundreds of related individuals can be produced from the ova and sperm of the same man and woman within two years. The average production rate using Podsnap’s Technique is 11,000 brothers and sisters in 150 batches of identical twins. Called over by the director, Mr. Henry Foster, an employee at the plant, tells the attentive students that the record for this particular factory is over 16,000 siblings. The Director and Henry Foster continue to explain the processes of the plant to the boys. After fertilization, the embryos travel on a conveyor belt in their bottles for 267 days, the gestation time period for a human fetus. On the last day, they are â€Å"decanted,† or born. The entire process is designed to mimic the conditions within a human womb, including shaking every few meters to familiarize the fetuses with movement. Seventy percent of the female fetuses are sterilized; they are known as â€Å"freemartins.† The fetuses undergo different treatments depending ... ...Helmholtz is preoccupied with the thought that his writing talent could be better used than simply for writing hypnopaedic phrases. His work leaves him feeling empty and unfulfilled. Bernard becomes nervous, jumping up at one point because he thinks, wrongly, that someone is listening at the door. Summary: Chapter 5 After a game of Obstacle Golf, Henry and Lenina fly in a helicopter over a crematorium where phosphorous is collected from burning bodies for fertilizer. They drink coffee with soma before heading off to the Westminster Abbey Cabaret. They take another soma dose before they return to Henry’s apartment. Although the repeated doses of soma have made them almost completely oblivious to the world around them, Lenina remembers to use her contraceptives. Every other Thursday, Bernard has to take part in Solidarity Service at the Fordson Community Singery. The participants sit twelve to a table, alternating men and women. While a rousing hymn plays, the participants pass a cup of strawberry ice cream soma and take a soma tablet with it. They work themselves into a frenzy of exultation and the ceremony ends in a sex orgy that leaves Bernard feeling more isolated than ever.

Video Games Are Not a Bad Influence on Children

Majority of people think that video games are a bad influence on children and teens. Children need to know what is right from worng and the people that can teach them is their parents. Children need to realize reality from fiction. School teacher can also help the children with the reality. I believe that videos games do not have a bad influence on children.Parents need to teach their children that video games are only games and the thing that are done in the games are things that can not be done in the real world. Video games have more violence now than usual, but the parents should teach their children that violence is not the way to solve anything. Majority of the young parents accept the violence video games because they themselves grew up with those games and they want their children to go up with them as well.The old generations didn't grow up with video games and the new generation is. The factuly and staff of the school can also prevent violence, because just as much as child ren are with their parents they are with the factuly and staff at the school. When a child does or even makes a gesture its up to the factuly or staff to put a stop to it. If the factuly or staff does not put a stop to the bad gesture then the child is going to think its ok and he is going to keep doing it.

Ace Manufacturing Essay

Of all the topics in this course, many students find Lesson 4 to be the most frustrating. I think this may be due in part to an apparent contradiction: there are lots of numbers and equations to work with, but surprisingly little certainty in our conclusions. I share your frustrations at times. Fortunately, these cases are the only â€Å"strictly financial† case studies †¦ the only ones where number crunching is an end unto itself. However, basic financial analysis will always be an important part of our toolkit for making pricing decisions. The document which follows contains the â€Å"answers† to these two case study assignments: Ace Manufacturing and Healthy Spring Water. Despite the financial emphasis, they are similar to the previous cases insofar as they’re intentionally open-ended and somewhat vague to encourage you to draw out all of the contingencies and factors that need to be considered. They’re intended to stimulate thinking. If you feel a bit frustrated by that, it probably means they’re working. Only after you’ve identified the issues and concepts that are relevant to the questions can you start to focus your efforts on how to solve the problem. This is my answer key (of sorts) for the two assigned cases. I know  how much many of you struggled with this case and your efforts were not in vain. Having had to slog through all of the confounding complexities of financial analysis is necessary to fully prepared you for what may lie ahead in your professional endeavors. Ace Manufacturing 1. What is the relevant unit cost for making this pricing decision? There are two primary alternatives that you might consider when approaching this question. Those of you who have this type of responsibility in a â€Å"real world† context are likely to suggest that fixed costs and G&A costs should be allocated equally/proportionately across the two products. At the opposite extreme, you might have chosen to argue that the additional 30,000 units should only be required to cover the incremental costs incurred †¦ implying a relevant unit cost of $7.50. Is one of these approaches â€Å"better† or â€Å"more correct† than the other? Is one of them more realistic? More conservative? Is one approach more conventional †¦ and does being â€Å"conventional† mean it is correct? Arguing persuasively for either position †¦ or a compromise view in between the two †¦ has some merit. And †¦ I’ll certainly try to be fair in evaluating your work, but I have a bias toward being both conservative and coldly realistic. Here’s my thinking †¦ building the units requires using designs that cost money to build and tooling that the company borrowed money to purchase. These are direct fixed costs. They also require maintenance of the plant which is currently being covered by the first 150,000 units. Since incurring these costs is necessary to producing the additional 30,000 units, why shouldn’t the additional 30,000 units be required to cover a fair share of the costs? That leaves the $60,000 increase in General and Administrative Costs associated with the new production †¦ which I would treat in the same way as the increases in direct fixed costs. Does all of this â€Å"squabbling† about how and where to allocate costs make a difference? It makes a big difference in evaluating the profitability of pursuing this new account. 2. Is this business sufficiently profitable to make bidding worthwhile? Although there can be a few subtle variations on this analysis, here’s the way that the two alternative approaches to allocating costs break down: One approach (Plan A) yields a profitable outcome †¦ $2.50 per incremental unit. The other, a loss of $1.25 per incremental unit. When you look at the total dollars columns, however †¦ either scheme generates the same level of profitability – a net gain of $75,000. Confused? The notion of the incremental units covering their â€Å"fair share† of fixed costs shows a net loss resulting from this additional business, but you can’t argue with the total dollars outcome. While the additional units don’t cover their â€Å"fair share† of costs, they contribute $75,000 toward these costs – costs that would not have been covered by the original 150,000 units. In this situation, the concepts of fairness and conventional practice could obscure a profitable opportunity. Based on the financial analysis alone, the company should definitely take the new business. What other considerations are relevant? Well †¦ is there a potential downside in terms of â€Å"indirect† cannibalization and price erosion? There’s always the Walmart effect to worry about †¦ that if you sell an â€Å"incremental volume† of goods at a discount through an alternative channel, buyers may switch channels – and 10,000 units sold at discount will cannibalize 10,000 units in sales at higher margins. Another concern is that prospective buyers will use the lower-priced â€Å"inferior† product as leverage in negotiating the price of the better product. Even slight price reductions in the 150,000 of regular sales would wipe out any profitability gains from additional sales of the inferior product. A simple case study †¦ and two short questions. But appearances can be deceiving. For grading purposes, I’m looking for a thoughtful analysis of the situation †¦ a recognition that there’s more here than crunching a few numbers. A â€Å"bad answer† would be one that rejects the possibility of pursuing this account without recognizing that it is a profitable venture from a strictly financial perspective.

Roberts v. Texaco †Management Research Paper

Roberts v. Texaco – Management Research Paper Free Online Research Papers Roberts v. Texaco Management Research Paper The case of Roberts v. Texaco covers many of the items we have gone over in class. It talks about the EEOC, mediation, racial discrimination, Tittle VII and settlements. A suit was filed on March 23, 1994 by Bari-Ellen Roberts and four other African-American Texaco employees on behalf of more than 1400 Texaco employees. Roberts worked for Texaco as their Senior Financial Analyst from 1990 to 1997. The basis of their suit was that Texaco had been practicing hiring and promotion practices based off race and not qualifications. At the time of the suit, there were 873 executive that were earning more than $106 thousand dollars a year and only six were African-American. Ms. Roberts was called uppity and a smart-mouth little colored girl. For three years the case worked its way throught the judicial system until it finally made a breakthrough. On November 3, 1996, the New York Times reported that they had evidence of several upper level employees at Texaco being recorded on audio tape using repeated racial slurs and using demeaning terms to describe African-Americans. They had also been told that this evidence was ordered to be destroyed by Texaco. Immediately the EEOC launched a probe to determine what pieces of evidence the company had that would corroborate the claim. While Texaco had settled in for the long haul in this legal battle, it came to a quick conclusion. After the tapes were uncovered, Texaco started looking to settle the case as quick as possible. The public relations issues that would arise the longer the case drew out could seriously hurt the company more than was already done. Within one month on November 17, 1996, the EEOC and the plaintiffs announced that an agreement had been made for a $176.1 million dollar class-action settlement. The suit was declared moot on January 27, 1997. The settlement included the following: Provide a payment to the plaintiff-class in the amount of $115 million, along with a one-time salary increase of about 11 percent for current employees of the plaintiff-class, effective January 1, 1997; Create an Equality and Tolerance Task Force which will be charged with determining potential improvements to Texaco’s human resources programs, as well as helping to monitor the progress being made in those programs (three members of the Task Force to be appointed by the plaintiffs, three members by Texaco and a mutually agreed-upon chairperson); Adopt and implement company-wide diversity and sensitivity, mentoring, and ombuds programs; Consider nationwide job posting of more senior positions than are currently posted; and Monitor its performance on the programs and initiatives provided for under the settlement agreement. A study that was conducted showed that the suit will end up costing Texaco about $500 million dollars. The statute that was relevant was Title VII of the Civil Rights Act of 1964. The point of contention was discrimination because of race. This discrimination was shown in the form of hiring practices that didn’t accurately represent the community as well as promotions that were biased. The interesting thing about this case is that the EEOC didn’t get involved until there were allegations made by a major publisher and they knew what to look for; three ninety minute audio tapes. Once this came out, the EEOC filed their claim on behalf of the plaintiffs. These audio tapes were very explicit in the terms they used to describe the executives feelings toward minorities. Texaco hired a retired U.S. Attorney to investigate the tapes to find out how damaging they were before they agreed to a settlement. The attorneys investigation is extremely interesting to read as he tries to spin certain parts of the tapes as non damaging. At one point in the tapes, an executives ref ers to black jellybeans and how they always end up at the bottom of the bag. The attorney advises that this comment was not racially motivated but none of the conversation prior was about candy. No matter the spin, he couldn’t avoid the language used and discriminatory remarks. After seeing his report was when Texaco decided to settle, knowing that the evidence was much too damaging for their company to overcome in a lawsuit. The employment environment since this case has been drastically changed at Texaco. The task force that was put in place as part of the settlement had authority for five years to determine the policies that needed to be put in place to meet the objectives of the agreement. This task force met for two days a week and was composed of seven people; three appointed by Texaco, three appointed by the plaintiffs, and one independent who served as a chairperson. Even though the settlement was agreed to, this task force seemed to use mediation to arrive at policies both sides could live with. I think this made for a much less hostile environment when putting the policies in effect. The task force’s goals were set high. Within the first six months, Texaco was charged with implementing a diversity and training program for the entire company as well as a mentoring program. They also had to begin posting jobs at a certain paygrade or above nationally. An extremely important objective that they had to meet during this time was to develop a way for there to be no fear of retaliation for employees with complaints of discrimination. This is similar to the whistleblower statutes that we studied. A policy such as this would keep the employer from commiting unlawfull acts such as discrimination while keeping employees from feeling like they might lose their job if they took an injustice to the authorities. The fallout from the case included the firing of one executive, suspension of another, and two executives that had retirement benefits taken away. This case clearly shows the power and importance of Tittle VII of the Civil Rights Act of 1964. It also demonstrates the effect of good mediation as well as what happens when the EEOC gets involved in a case. References Pruitt, Stephen W., The Texaco racial discrimination case and shareholder wealth. (2002) Retrieved from InfoTrac on August 7, 2005. Exhibit 1, Pragmmatic Relief. Retrieved from CourtTV.com on August 7, 2005. Texaco fires executive, Disciplines three others. January 9, 1997, Los Angeles Times. Research Papers on Roberts v. 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