Quilcene Oysteria farms and sells oysters in the Pacific Northwest. The company harvested and sold 7,300 pounds of oysters in August. The company’s flexible budget for August appears below:

The actual results for August appear below:

Required:

Calculate the company’s revenue and spending variances for August. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

The Pyramid Company has used the LIFO method of accounting for inventory during its first two years of operation, 2016 and 2017. At the beginning of 2018, Pyramid decided to change to the average cost method for both tax and financial reporting purposes. The following table presents information concerning the change for 2016–2018. The income tax rate for all years is 40%.

Pyramid issued 49,000 $1 par, common shares for $225,000 when the business began, and there have been no changes in paid-in capital since then. Dividends were not paid the first year, but $12,000 cash dividends were paid in both 2017 and 2018.

Required:
1. Prepare the journal entry to record the change in accounting principle.
2. Prepare the 2018–2017 comparative income statements beginning with income before income taxes.
3. Prepare the 2018–2017 comparative statements of shareholders’ equity. (Hint: The 2016 statements reported retained earnings of $35,760. This is $59,600 – [$59,600 × 40%]).

Direct Labor Variances

La Batre Bicycle Company manufactures commuter bicycles from recycled materials. The following data for July of the current year are available:

a. Determine the direct labor rate variance, direct labor time variance, and total direct labor cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

b. How much direct labor should be debited to Work in Process?
$

You are provided with the following information for Sunland Inc. Sunland Inc. uses the periodic method of accounting for its inventory transactions. March 1 Beginning inventory 2,000 liters at a cost of 70¢ per liter. March 3 Purchased 2,500 liters at a cost of 74¢ per liter. March 5 Sold 2,300 liters for $1.05 per liter. March 10 Purchased 4,000 liters at a cost of 81¢ per liter. March 20 Purchased 2,500 liters at a cost of 89¢ per liter. March 30 Sold 5,200 liters for $1.25 per liter. Collapse question part (a1) Incorrect answer. Your answer is incorrect. Try again. Calculate the value of ending inventory that would be reported on the balance sheet, under each of the following cost flow assumptions. (Round answers to 2 decimal places, e.g. 125.50.)

(1) Specific identification method assuming: (i) The March 5 sale consisted of 1,000 liters from the March 1 beginning inventory and 1,300 liters from the March 3 purchase; and (ii) The March 30 sale consisted of the following number of units sold from beginning inventory and each purchase: 450 liters from March 1; 550 liters from March 3; 2,900 liters from March 10; 1,300 liters from March 20.

(2) FIFO

(3) LIFO

The comparative balance sheet of Canace Products Inc. for December 31, 20Y6 and 20Y5, is as follows: 1 Dec. 31, 20Y6 Dec. 31, 20Y5 2 Assets 3 Cash $643,740.00 $678,670.00 4 Accounts receivable (net) 567,590.00 546,500.00 5 Inventories 1,010,270.00 983,300.00 6 Investments 0.00 239,830.00 7 Land 520,160.00 0.00 8 Equipment 879,990.00 680,730.00 9 Accumulated depreciation (244,840.00) (200,100.00) 10 Total assets $3,376,910.00 $2,928,930.00 11 Liabilities and Stockholders’ Equity 12 Accounts payable (merchandise creditors) $771,010.00 $748,100.00 13 Accrued expenses payable (operating expenses) 63,500.00 71,400.00 14 Dividends payable 7,850.00 5,880.00 15 Common stock, $2 par 56,000.00 32,000.00 16 Paid-in capital: Excess of issue price over par—common stock 408,000.00 192,000.00 17 Retained earnings 2,070,550.00 1,879,550.00 18 Total liabilities and stockholders’ equity $3,376,910.00 $2,928,930.00 The income statement for the year ended December 31, 20Y6, is as follows: 1 Sales $5,983,200.00 2 Cost of goods sold 2,452,370.00 3 Gross profit $3,530,830.00 4 Operating expenses: 5 Depreciation expense $44,740.00 6 Other operating expenses 3,099,470.00 7 Total operating expenses 3,144,210.00 8 Operating income $386,620.00 9 Other expense: 10 Loss on sale of investments (64,530.00) 11 Income before income tax $322,090.00 12 Income tax expense 102,390.00 13 Net income $219,700.00 Additional data obtained from an examination of the accounts in the ledger for 20Y6 are as follows: a. Equipment and land were acquired for cash. b. There were no disposals of equipment during the year. c. The investments were sold for $175,300 cash d. The common stock was issued for cash. e. There was a $28,700 debit to Retained Earnings for cash dividends declared.

Are there any recent examples of a capital budgeting decision gone bad (besides Microsoft/Nokia and Sony/Columbia pictures?

The ledger of Tyler Lambert and Jayla Yost, attorneys-at-law, contains the following accounts and balances after adjustments have been recorded on December 31, 20Y3:

Lambert and Yost

ADJUSTED TRIAL BALANCE

December 31, 20Y3

The balance in Yost’s capital account includes an additional investment of $10,200 made on April 10, 20Y3.

X

Accounts, Labels and Amount Descriptions

X

Income Statement and Allocation to Partners

1. Prepare an income statement for 20Y3. Create a separate statement indicating the division of net income to the partners. The partnership agreement provides for salary allowances of $45,400 to Lambert and $54,600 to Yost, allowances of 10% on each partner’s capital balance at the beginning of the fiscal year, and equal division of the remaining net income or net loss. Refer to the information given and the lists of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. If a net loss is incurred, enter that amount as a negative number using a minus sign.

Describe and explain what is CVP analysis. Provide examples of how managers may use this tool for sensitivity analysis

Juan acquires an oil and gas property interest for $500,000. Juan expects to recover 100,000 barrels of oil. Intangible drilling and development costs are $125,000 and are charged to expense. Other expenses are $50,000. During the year, 20,000 barrels of oil are sold for $650,000. Juan's depletion deduction is

A) $100,000.

B) $112,500.

C) $160,000.

D) $600,000.

Sunspot Beverages, Ltd., of Fiji uses the weighted-average method in its process costing system. It makes blended tropical fruit drinks in two stages. Fruit juices are extracted from fresh fruits and then blended in the Blending Department. The blended juices are then bottled and packed for shipping in the Bottling Department. The following information pertains to the operations of the Blending Department for June. Percent Completed Units Materials Conversion Work in process, beginning 58,000 70% 40% Started into production 299,000 Completed and transferred out 289,000 Work in process, ending 68,000 75% 25% Materials Conversion Work in process, beginning $ 20,000 $ 6,200 Cost added during June $ 214,600 $ 131,500 Required: 1. Calculate the Blending Department's equivalent units of production for materials and conversion in June. 2. Calculate the Blending Department's cost per equivalent unit for materials and conversion in June. 3. Calculate the Blending Department's cost of ending work in process inventory for materials, conversion, and in total for June. 4. Calculate the Blending Department's cost of units transferred out to the Bottling Department for materials, conversion, and in total for June. 5. Prepare a cost reconciliation report for the Blending Department for June.

Horizontal Analysis of Income Statement

For 20Y2, McDade Company reported a decline in net income. At the end of the year, T. Burrows, the president, is presented with the following condensed comparative income statement:

Required:

1. Prepare a comparative income statement with horizontal analysis for the two-year period, using 20Y1 as the base year. Round percentages to one decimal place. Use the minus sign to indicate a decrease in the "Increase (Decrease)" columns.

.

1. In your own words, explain the difference between absorption costing and variable costing methods. How does each treat fixed manufacturing overhead? Provide an example and calculate the unit product cost using each method.

You have just been hired as a new management trainee by Earrings Unlimited, a distributor of earrings to various retail outlets located in shopping malls across the country. In the past, the company has done very little in the way of budgeting and at certain times of the year has experienced a shortage of cash. Since you are well trained in budgeting, you have decided to prepare a master budget for the upcoming second quarter. To this end, you have worked with accounting and other areas to gather the information assembled below.

The company sells many styles of earrings, but all are sold for the same price—$15 per pair. Actual sales of earrings for the last three months and budgeted sales for the next six months follow (in pairs of earrings):

The concentration of sales before and during May is due to Mother’s Day. Sufficient inventory should be on hand at the end of each month to supply 40% of the earrings sold in the following month.

Suppliers are paid $4.50 for a pair of earrings. One-half of a month’s purchases is paid for in the month of purchase; the other half is paid for in the following month. All sales are on credit. Only 20% of a month’s sales are collected in the month of sale. An additional 70% is collected in the following month, and the remaining 10% is collected in the second month following sale. Bad debts have been negligible.

Monthly operating expenses for the company are given below:

Insurance is paid on an annual basis, in November of each year.

The company plans to purchase $18,500 in new equipment during May and $45,000 in new equipment during June; both purchases will be for cash. The company declares dividends of $18,750 each quarter, payable in the first month of the following quarter.

The company’s balance sheet as of March 31 is given below:

The company maintains a minimum cash balance of $55,000. All borrowing is done at the beginning of a month; any repayments are made at the end of a month.

The company has an agreement with a bank that allows the company to borrow in increments of $1,000 at the beginning of each month. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. At the end of the quarter, the company would pay the bank all of the accumulated interest on the loan and as much of the loan as possible (in increments of $1,000), while still retaining at least $55,000 in cash.

Required:

Prepare a master budget for the three-month period ending June 30. Include the following detailed schedules:

2. A cash budget. Show the budget by month and in total. Determine any borrowing that would be needed to maintain the minimum cash balance of $55,000.

3. A budgeted income statement for the three-month period ending June 30. Use the contribution approach.

4. A budgeted balance sheet as of June 30.

1) Which of the following is a false statement as it relates to analysis?

a. Profitability may not be a major consideration as long as the resources for repayment can be projected.

b. Equity capital provides creditors with a cushion against loss

c. There is a difference between the objectives that are sought by short term grantors of credit and those sought by long term grantors of credit.

d. If merchandise with a 20% markup is sold on credit, it would take ten successful sales of the same amount to make up for one sale not collected.

e. financial structure of the entity is of interest to creditors.

2). Which of these statements is false?

a. A ratio can be computed for any pair of numbers.

b. Given the large quantity of variables included in financial statements, a very long list of meaningful ratios can be derived.

c. Comparing ratios computed from the income statement and balance sheet numbers can create difficulties due to the timing of the financial statements.

d. Financial ratios are usually expressed in percent or times.

e. In a vertical analysis, a figure from this year's statement is compared with a base selected from the prior statement.