2. Joe Ringworth, factory supervisor at Winger Enterprises, had been attending night classes to earn a degree in business. He was particularly puzzled by what one of his accounting professors had said in class the previous evening. The professor, who knew that Joe worked as a factory supervisor, had said that some of Joe's salary could end up on the company's balance sheet at the end of the month. This didn't make any sense to Joe since he gets the salary, not the company. Required: Explain to Joe why some of his salary could end up on the company's balance sheet at the end of the month. 3.7. The questions in this exercise are based on Toll Brothers, Inc., one of the largest home builders in the United States. To answer the questions, you will need to download Toll Brothers' 2004 annual report (www.tollbrothers.com/homesearch/servlet/HomeSearch?app5IRannual) and its Form 10-K for the Fiscal year ended October 31, 2004. To access the 10-K report, go to www.sec.gov/edgar/searchedgar/companysearch.html. Input CIK code 794170 and hit enter. In the box on the top of your computer screen (Filing Type) define the scope of your search by inputting 10-K and then pressing enter. Select the 10-K with a filing date of January 13, 2005 by clicking on the Documents button. Then click on the link titled ten-k.txt. You do not need to print these documents to answer the questions. Required: a. What is Toll Brothers' strategy for success in the marketplace? Does the company rely primarily on a customer intimacy, operational excellence, or product leadership customer value proposition? What evidence supports your conclusion? b. What business risks does Toll Brothers face that may threaten the company's ability to satisfy stockholder expectations? What are some examples of control activities that the company could use to reduce these risks? (Hint: Focus on pages 1011 of the 10-K.) c. Would Toll Brothers be more likely to use process costing or job-order costing? Why? d. What are some examples of Toll Brothers' direct material costs? Would you expect the bill of materials for each of Toll Brothers' homes to be the same or different? Why? e. Describe the types of direct labor costs incurred by Toll Brothers. Would Toll Brothers use employee time tickets at their home sites under construction? Why or why not? f. What are some examples of overhead costs that are incurred by Toll Brothers? g. Some companies establish prices for their products by marking up their full manufacturing cost (i.e., the sum of direct materials, direct labor, and manufacturing overhead costs). For example, a company may set prices at 150% of each product's full manufacturing cost. Does Toll Brothers price its houses using this approach? h. How does Toll Brothers assign manufacturing overhead costs to cost objects? From a financial reporting standpoint, why does the company need to assign manufacturing overhead costs to cost objects