 Accounting Applications Presented by: Jacqueline Bell Matthew Cleary Sean Healy Yuanhan Hu

Case 1

Colleen Sauer Corporate Resource Accounting Manager Oversees accounting for: Facilities Supply Chain Legal Dept. Finance Dept. Executive Dept. Human Resources

APS Accounting  Product measured by megawatt hours  Inventory method = FIFO  Arizona Corporation Commission sets pricing  Computer automatically tracks inventory and ledgers  DL tracked through HR ledger  Labor divided by capital and operating expenses  Overhead automatically charged to its own ledger

 Profitability 11 Main Power Plants Include Nuclear, Natural-Gas, and Coal Solar and Renewable Energy projects began in 1996 Regular Profit Analysis Reports Utilize most profitable plants to fill demand Variables: DM prices DL wages Seasonal demand Plant efficiency

 Work Order Management System  Direct feed to general ledger  Tracks all labor  Materials applied to specific job  Utilize Oracle’s Hyperion software  Tracks actual vs. master and flexible budgets  Tracks variances  Reforecasts BudgetingCosting

Managerial Decisions  Head count layoff within divisions to cutcosts and increase profitability  Outsource some HR functions to externalcompany  Regular trending reports based onemployee activity performance

Performance Evaluations  Individual employee sets goals and tracks progress  Managers collaborate and rate employee performance  Monthly evaluations  Goal system at all levels of company  Raises and bonuses tied to ratings

Case 2

Mary Healy Former VP of Corporate Finance Former VP of Investor Relations

Capital Investments  Project sales in underdeveloped areas  Determine costs  Set long-term hurdle for investment  Analysis based on projections  Corporate perspective looks at countries as markets  Strategic placement of stores  Can weather short-term losses for long-term profits  Does not use equity to finance investments

 Costs Profit and Loss Reports (P&L) from store level to national level P&L based on sales volume DM and DL as percentage of sales volume DM ordered based on predicted sales volume Overhead like health insurance is allocated Product profitability based on sales volume New customers vs. existing changing order to new product Analyzed at regional level

 Budget and Analysis Different systems for different levels Store level analyze P&L Reports Corporate level analyzes cash flows National/Regional markets Analyzed monthly P&L Reports for administrative departments Distinct Financial Reporting Department Supply Chain Department forecasts food costs and tracks throughout year

Managerial Decisions  Hundreds of new stores open annually  Likes to invest in underdeveloped areas forlong-term potential profit  Less profitable stores close regularly  “Natural pruning of the base”

Performance Evaluations  Benchmarks based on store sales  Store sales compared to others in same area  Bonuses based on performance (financial/nonfinancial metrics)  Many different metrics used to evaluated individual performance  Set personal goals with manager  Metrics include: increase in income, increase in equity, profitability

Suggestions  Improve quality of employees to improve efficiency  Engage employees in suggestions and decision-making  Strengthen post-sale service to increase customer retention

Questions?