Colorado Technical University Accounting Questionnaire
Part A 300 – 400 words
You have learned that the internal control framework for most U.S. companies is the Committee of Sponsoring Organizations of the Treadway Commission (COSO) Internal Control — Integrated Framework, which was issued in 1992.
Using the Library and other research tools, complete the following:
Identify the Treadway Commission and discuss its origin, history, and purpose.
List the 5 components of internal control as defined by COSO.
Discuss at least 2–3 elements that are included in each component as it relates to Bovar Company.
Part B – 1 page document.
The general manager at the Overall Manufacturing Company has submitted the following information for a specific line of heat exchangers with the recommendation to discontinue the round style heat exchanger because of its continued net operating income losses.
Overall Manufacturing Company
Less variable expenses
Less fixed expenses:
Line supervisors’ salaries
General factory overhead*
Total fixed expenses
Net operating income (loss)
*A common fixed cost that is allocated on the basis of sales dollars
Analyze the above information to determine if the round heat exchanger should be discontinued. The special equipment that is used to produce the round heat exchanger has no resale value. If the round heat exchanger is discontinued, the two line supervisors who are assigned to the model would be discharged. Overall Manufacturing Company has no other use for the capacity that is now being used to produce the round heat exchanger.
Include the following in your analysis:
Should the production and sale of the round heat exchanger be discontinued? Show your analysis to support your answer.
How might this same information be presented to make it more useful to management in assessing the long-run profitability of its various product lines?
What policy change would you recommend to management?