Case Study Review MSM 630 T 301 Bellevue

Case Study Review MSM 630 -T 301 Bellevue University Week 11

Resources Unlimited What Went Wrong We will determine the following factors. • Baseline profits for the years 1986 – 1988 • Determine number of gas accounts in 1990 • Salaries for entry level management • How many gas accounts were transferred to the hedge fund • Needed raise for the female accountant in order to avoid a discrimination suit

Baseline Profit 1986 -1988 • 1986 profit $1, 087, 000 Profits in millions $1 200 000 • 1987 profit $803, 000 $1 000 000 • Average profit of the 8 quarters $236, 230, 000 $800 000 $600 000 • Baseline set by Resources Unlimited Corporation $200, 750, 000 $400 000 $200 000 98 7 ag e 1 Av 89 er 6 ag e 1 98 7 Av er ta l 1 19 87 to 4 - 19 87 Q Q 3 - 19 87 2 - 19 87 Q 1 - 98 6 Q ta l 1 4 - 19 86 To 19 86 Q Q 3 - 19 86 2 Q Q 1 - 19 86 $0

Gas Accounts in 1990 • 1988 • 1990 • 32 Gas • 86 Oil • 64 Oil • Variance of 512 with all things equal • This results in a Variance of 512 • Number of Gas accounts increases to 54

Salaries for Entry Level Management • No data supports the salaries for the entry level management team. • The range of salaries of the accountant was from $32, 000 to $55, 000 which indicates that salaries may be determined based on education, previous experience, employee reviews and time with company.

Gas Account Transferred to Hedge Fund Number of Gas Accounts Days Accounts per day 500 30 17 400 24 17

Raise Needed to Stop Lawsuit Male 1 Salarie $50, 000 Male 2 Salarie $55, 000 Series 1 Increase Needed Lowest male salery -2 x std dev Male 3 Salarie $52, 000 Female 1 Salarie Mean of Male Salarie $52, 333 2 x STD DEV Salarie STD Dev of Male Salarie $1, 262 2 x STD DEV Salarie $2, 524 Female 1 Salarie $32, 000 STD Dev of Male Salarie Mean of Male Salarie Male 3 Salarie Male 2 Salarie Lowest male salery -2 x std dev $49, 476 Increase Needed $17, 000 Male 1 Salarie $0 $10 000 $20 000 $30 000 $40 000 $50 000 $60 000

Resources Unlimited • This company has several unethical practices that ultimately lead to its bankruptcy, • Executives hid information to look more profitable • Females receive less pay then male counterparts • Poor decision made to gamble on derivatives and hedges • Profits slowly dropped over last year