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BOR CPAs, Inc. Payroll Performance Evaluation No Transfer Market Transfer Price Negotiated Transfer Price BOR CPAs Inc BOR CPAS, Inc. is a closely held corporation owned by three stockholders who used the intials of their last names to form the corporation's name Cyrus Bailey, John Ogden, and Samuel Rogers. The firm's Certified Public Accountants (CPA) perform audies of both public companies and privately owned companies BOR'S CPAs also provide tax services to both individuals and businesses The corporation is divided into two peolt enters the Audit Division and the Tax Division Each division is composed of two cost centers. The Audit Division is composed of two cost-center departments. Public Company Audits and Private Company Audits The Tax Division is composed of two cost center departments also. Individual Tax and Business Tax BOR, a decentralized organization, is interested in evaluating the performance of the hio divisions. The stockholders are responsible for deciding on investment in the two divisions. Cyrus Baley is in charge of the performance evaluation, and turns to you for assistance. Mr. Baley is only interested in evaluating operations at the profit center (division) level and not at the cost center (department level Mr. Barley is considering temporarily using some of the start from the Tax Division to assist the Audit Division during the upcoming busy audit season and would like to evaluate the effect of this on net income The Tax Division is estimated to have 800 hours of excess capacity lastery Problem: Decentralized Operations BOR CPAN, Inc. Payroll Performance Evaluation No Transfer Market Transfer Price Negotiated Transfer Price BOR CPAs Inc The unit for determining sakis revenue in both divisions is the engagement, which means the total agreed upon work for a given cient in either aude or tax for a given year The company charges on average a fee of $75,000 per audit engagement, and $15.750 per tax engagement The company has its own Payroll Office, which provides paytoll services to both divisions and will alocate its total expenses to the two divisions as service de atent charges ** DWS SO Oasic data for the company $100.00 $50.00 Hourly market rate for staff (the price the company would have to pay from an outside contractor for staff services) Average hourly cost rate for staff (the average price the company pays to its stat) Number of paychecks issued by Audit Division Number of paychecks issued by Tax Division Total expense for Payroll Office Amount of assets invested in Audit Division by BOR CPAS, Inc Amount of assets invested in Tax Division by BOR CPAS, Inc. 110 340 $29,250 $10,000,000 $4,000,000

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