On December 31, 2017, Ainsworth, Inc., had 800 million shares of common stock outstanding. Twenty five million shares of 6%, $100 par value cumulative, nonconvertible preferred stock were sold on January 2, 2018. On April 30, 2018, Ainsworth purchased 30 million shares of its common stock as treasury stock. Twelve million treasury shares were sold on August 31. Ainsworth issued a 5% common stock dividend on June 12, 2018. No cash dividends were declared in 2018. For the year ended December 31, 2018, Ainsworth reported a net loss of $165 million, including an after-tax loss from discontinued operations of $450 million. Required: 1. Compute Ainsworth's net loss per share for the year ended December 31, 2018. 2. Compute the per share amount of income or loss from continuing operations for the year ended December 31, 2018. 3. Prepare an EPS presentation that would be appropriate to appear on Ainsworth's 2018 and 2017 comparative income statements. Assume EPS was reported in 2017 as $0.65, based on net income (no discontinued operations) of $520 million and a weighted-average number of common shares of 800 million.

Rome Metals Cost Breakdown	Per Unit
Direct materials	$8
Direct labor	$45
Variable overhead	$9
Fixed overhead	$14
Shipping Cost	$2
Total Per Unit	$78

Rome Metals a US based firm located in Rome, Georgia makes metal brackets used in the construction of warehouse shelving. The firm has a practical capacity of 42,000 units and for the past several years has produced at a constant volume of 35,000 units/year. Rome Brackets are priced at $92/unit. The manufacturing costs incurred to make a bracket at the 35,000 unit level is shown above. Note that the $2/unit shipping cost is included in the manufacturing costs breakdown. An order for 10,000 has been received from a new customer - Fedex Logistics Services - but at a required price of only $78/unit. Fedex has agreed to pick up the order from the Rome facility itself saving Rome Metals the shipping fee. Due to capital constraints Rome Metals cannot adjust its practical capacity nor does the firm have any potential outsourcing partners. Assuming no loss of existing customer goodwill, should Rome Metals accept the offer from Fedex Logistics Services.

a) Yes, Rome Metals Profit will Increase by $154,000

b) Yes, Rome Metals Profits will Increase by $160,000

c) Yes, Rome Metals Profits will Increase by $76,000

d) No, Rome Metals Profits Will Be Reduced by $70,000

e) Yes, Rome Metals Profits Will Increase by $70,000

f) No, Rome Metals Profits Will be reduced by $30,000

1.) SkyChefs, Inc., prepares in-flight meals for a number of major airlines. One of the company’s products is grilled salmon in dill sauce with baby new potatoes and spring vegetables. During the most recent week, the company prepared 7,000 of these meals using 2,700 direct labor-hours. The company paid its direct labor workers a total of $27,000 for this work, or $10.00 per hour.

According to the standard cost card for this meal, it should require 0.40 direct labor-hours at a cost of $9.30 per hour.

Required:

1. What is the standard labor-hours allowed (SH) to prepare 7,000 meals?

2. What is the standard labor cost allowed (SH × SR) to prepare 7,000 meals?

3. What is the labor spending variance?

4. What is the labor rate variance and the labor efficiency variance?

(For requirements 3 and 4, 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. Do not round intermediate calculations.)

2.)

The Gourmand Cooking School runs short cooking courses at its small campus. Management has identified two cost drivers it uses in its budgeting and performance reports—the number of courses and the total number of students. For example, the school might run two courses in a month and have a total of 62 students enrolled in those two courses. Data concerning the company’s cost formulas appear below:

	Fixed Cost per Month		Cost per Course		Cost per Student
Instructor wages			$	2,950
Classroom supplies					$	290
Utilities	$	1,240	$	55
Campus rent	$	5,200
Insurance	$	2,400
Administrative expenses	$	3,800	$	40	$	6

For example, administrative expenses should be $3,800 per month plus $40 per course plus $6 per student. The company’s sales should average $860 per student.

The company planned to run four courses with a total of 62 students; however, it actually ran four courses with a total of only 54 students. The actual operating results for September appear below:

	Actual
Revenue	$	50,420
Instructor wages	$	11,080
Classroom supplies	$	17,830
Utilities	$	1,870
Campus rent	$	5,200
Insurance	$	2,540
Administrative expenses	$	3,758

Required:

1. Prepare the company’s planning budget for September.

2. Prepare the company’s flexible budget for September.

3. Calculate the revenue and spending variances for September.

3.)

Dawson Toys, Ltd., produces a toy called the Maze. The company has recently created a standard cost system to help control costs and has established the following standards for the Maze toy:

Direct materials: 7 microns per toy at $0.34 per micron

Direct labor: 1.2 hours per toy at $7.20 per hour

During July, the company produced 4,900 Maze toys. The toy's production data for the month are as follows:

Direct materials: 70,000 microns were purchased at a cost of $0.32 per micron. 27,125 of these microns were still in inventory at the end of the month.

Direct labor: 6,280 direct labor-hours were worked at a cost of $49,612.

Required:

1. Compute the following variances for July: (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. Do not round intermediate calculations. Round final answers to the nearest whole dollar amount.)

a. The materials price and quantity variances.

b. The labor rate and efficiency variances.

4.)

You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The president has asked that you review the company’s costing system and “do what you can to help us get better control of our manufacturing overhead costs.” You find that the company has never used a flexible budget, and you suggest that preparing such a budget would be an excellent first step in overhead planning and control.

After much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for March:

	Cost Formula	Actual Cost in March
Utilities	$17,000 plus $0.21 per machine-hour	$	22,370
Maintenance	$38,900 plus $2.00 per machine-hour	$	66,700
Supplies	$0.70 per machine-hour	$	11,700
Indirect labor	$94,800 plus $1.90 per machine-hour	$	128,000
Depreciation	$68,100	$	69,800

During March, the company worked 15,000 machine-hours and produced 9,000 units. The company had originally planned to work 17,000 machine-hours during March.

Required:

1. Prepare a flexible budget for March.

2. Prepare a report showing the spending variances for March.

1. the audit firm of PWC evaluates the risk of material misstatement by disaggregating the total risk into its main components and sub components as indicated below

(a) inherent risk, (b) Control risk, (c) Detection risk (d) Operational risks, (e) finance risk and (f) compliance risk

required:

for each of the scenarios below, select the component of risk that is most directly illustrated. the component may be used once, more than once, or not at all. also suggest the effect on the financial statement and hoe the auditor might mitigate the risk (you may present your answer in the format below)

SCENARIO COMPONENT RISK EFFECT ON THE FINANCIAL STATEMENT HOW TO REDUCE THE RISK

A

B

C

D

E

F

A) A client fails to discover employee fraud on a timely bases because bank accounts are not reconciled monthly

B) The client's business manly deals with cash sales which is more susceptible to theft than credit sales

C) Confirmation of receivables by a new audit staff fails to detect a material misstatement

D) Disbursements (payouts) have occurred without proper approval

E) There is inadequate segregation of duties in the payroll section

F) The client is very close to violating debt covenants

G) XYZ Company, a client, lacks sufficient working capital to continue operations

Rooney Corporation builds sailboats. On January 1, 2019, the company had the following account balances: $75,000 for both cash and common stock. Boat 25 was started on February 10 and finished on May 31. To build the boat, Rooney had incurred cash costs of $5,800 for labor and $5,650 for materials. During the same period, Rooney paid $7,500 cash for actual manufacturing overhead costs. The company expects to incur $156,000 of indirect overhead cost during 2019. The overhead is allocated to jobs based on direct labor cost. The expected total labor cost for the year is $120,000.

Rooney uses a just-in-time inventory management system. Consequently, it does not have raw materials inventory. Raw materials purchases are recorded directly in the Work in Process Inventory account.

Required

1. Use the horizontal financial statements model, to record Rooney’s business events. The first row shows beginning balances.

2. If Rooney desires to earn a profit equal to 10 percent of cost, for what price should it sell the boat?

3. If the boat is not sold by year-end, what amount would appear in the Work in Process Inventory and Finished Goods Inventory on the balance sheet for Boat 25?

4. Is the amount of inventory you calculated in Requirement c the actual or the estimated cost of the boat?

Cash + Work in Process + Finished Goods + Manufacturing Overhead = Common Stock + Retained earnings Revenue - Expense = Net Income 75,000 + + + = 75,000 + - = + + + = + - = + + + = + - = + + + = + - = + + + = + - = + + + = + - = + + + = + - =

• If Rooney desires to earn a profit equal to 10 percent of cost, for what price should it sell the boat? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) _____
• Required C:
• If the boat is not sold by year-end, what amount would appear in the Work in Process Inventory and Finished Goods Inventory on the balance sheet for Boat 25? (Do not round intermediate calculations.)
• Required D:
• Is the amount of inventory you calculated in Requirement c the actual or the estimated cost of the boat?

On January 1, 2016, when its $30 par value common stock was selling for $80 per share, Novak Corp. issued $10,400,000 of 8% convertible debentures due in 20 years. The conversion option allowed the holder of each $1,000 bond to convert the bond into five shares of the corporation’s common stock. The debentures were issued for $11,232,000. The present value of the bond payments at the time of issuance was $8,840,000, and the corporation believes the difference between the present value and the amount paid is attributable to the conversion feature. On January 1, 2017, the corporation’s $30 par value common stock was split 2 for 1, and the conversion rate for the bonds was adjusted accordingly. On January 1, 2018, when the corporation’s $15 par value common stock was selling for $135 per share, holders of 30% of the convertible debentures exercised their conversion options. The corporation uses the straight-line method for amortizing any bond discounts or premiums.

(a) Prepare the entry to record the original issuance of the convertible debentures. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit

(b) Prepare the entry to record the exercise of the conversion option, using the book value method. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit

UNITS:
beginning WIP inventory (20% complete as to CC)	5,000
units started	20,000
units completed and transferred out	15,000
ending WIP inventory (Mat 100%, CC 50% complete)	10,000
Costs:
beginning inventory
materials	$ 4,000
CC	$ 1,000
Current period:
materials	$ 16,000
CC	$ 4,000
All materials are added at the beginning of the process

Please show the calculations! doing it in excel!

1. What is your products equivalent units (EUP) for Mat & CC using weighted average? -->	Materials EUP = ?	CC EUP = ?
2. What is your products equivalent units (EUP) for Mat & CC using FIFO? -->	Materials EUP = ?	CC EUP = ?
3. What is your products cost per equivalent unit (EUP) for Mat & CC using weighted average? -->	Materials cost per EUP = ?	CC cost per EUP = ?
4. What is your products cost per equivalent unit (EUP) for Mat & CC using FIFO? -->	Materials cost per EUP = ?	CC cost per EUP = ?
5. What is your products cost of ending WIP inventory using weighted average? -->	End MAT cost in WIP = ?	End CC cost in WIP = ?
6. What is your products cost of ending WIP inventory using FIFO? -->	End MAT cost in WIP = ?	End CC cost in WIP = ?
Check figures:
	weighted average	FIFO
your products total cost (Mat & CC) per equivalent unit is:	$ 1.05	$ 1.01

Cane Company manufactures two products called Alpha and Beta that sell for $165 and $130, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 113,000 units of each product. Its average cost per unit for each product at this level of activity are given below:

	Alpha				Beta
Direct materials		$	40			$	24
Direct labor			29				25
Variable manufacturing overhead			15				14
Traceable fixed manufacturing overhead			25				27
Variable selling expenses			21				17
Common fixed expenses			24				19
Total cost per unit		$	154			$	126

The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars.

1-1. Assume that Cane normally produces and sells 69,000 Betas and 89,000 Alphas per year. If Cane discontinues the Beta product line, its sales representatives could increase sales of Alpha by 13,000 units. What is the financial advantage (disadvantage) of discontinuing the Beta product line?

1-2. Assume that Cane expects to produce and sell 89,000 Alphas during the current year. A supplier has offered to manufacture and deliver 89,000 Alphas to Cane for a price of $116 per unit. What is the financial advantage (disadvantage) of buying 89,000 units from the supplier instead of making those units?

1-3. Assume that Cane expects to produce and sell 59,000 Alphas during the current year. A supplier has offered to manufacture and deliver 59,000 Alphas to Cane for a price of $116 per unit. What is the financial advantage (disadvantage) of buying 59,000 units from the supplier instead of making those units?

2. How many pounds of raw material are needed to make one unit of each of the two products? (Alpha / Beta)

whether auditor should be blamed when a company which they have expressed an unmodified audit opinion fails ? explain

	debits	credits
cash	37,500
accounts receivable	12,410
prepaid insurance	2,400
supplies	7,113
equipment	35,000
accumulated depreciation		10,000
accounts payable		7,569
unearned revenue		8,500
loan payable		15,000
capital stock		24,000
retained earnings, jan 1.		15,457
revenues		43,995
salary expense	12,098
rent expense	13,000
office expense	2,500
dividends	2,500
	124,521	124,521

a)   Asher Corporation's equipment had an original life of 140 months, and the straight-line depreciation method is used. As of January 1, the equipment was 40 months old. The equipment will be worthless at the end of its useful life.

b)   As of the end of the month, Asher Corporation has provided services to customers for which the earnings process is complete. Formal billings are normally sent out on the first day of each month for the prior month's work. January's unbilled work is $25,000.

c)   Utilities used during January, for which bills will soon be forthcoming from providers, are estimated at $1,500.

d)   A review of supplies on hand at the end of the month revealed items costing $3,500.

e)   The $2,400 balance in prepaid insurance was for a 6-month policy running from January 1 to June 30.

f)   The unearned revenue was collected in December of 20X7. Sixty percent of that amount was actually earned in January with the remainder to be earned in February.

g)   The loan accrues interest at 1% per month. No interest was paid in January.

Buffalo BBQ Restaurant is trying to become more efficient in training its chefs. It is experimenting with two training programs aimed at this objective. Both programs have basic and advanced training modules. The restaurant has provided the following data regarding the two programs after two weeks of implementation:

	Training Program A						Training Program B
New chef #	1	2	3	4	5		6	7	8	9	10
Hours of basic training	23	25	26	19	24		23	23	27	29	21
Hours of advanced training	7	6	10	11	11		6	3	0	3	3
Number of chef mistakes	13	13	15	15	15		7	7	9	6	7

a. Compute the following performance metrics for each program:

(1) Average hours of employee training per chef, rounded to one decimal place.

Program A:  hrs. per chef

Program B:  hrs. per chef

(2) Average number of mistakes per chef, rounded to one decimal place.

Program A:  mistakes per chef

Program B:  mistakes per chef

b. Which program should the restaurant implement moving forward?

On January 1, 2016, Flash and Dash Company adopted a healthcare plan for its retired employees. To determine eligibility for benefits, the company retroactively gives credit to the date of hire for each employee. The following information is available about the plan:

Service cost	$30,650
Accumulated postretirement benefit obligation (1/1/16)	159,600
Expected return on plan assets	0
Amortization of Prior service cost	11,400
Payments to retired employees during 2016	4,800
Interest rate	8%
Average remaining service period of active plan participants (1/1/16)	14 years

Required:

1.	Compute the OPRB expense for 2016 if the company uses the average remaining service life to amortize the prior service cost.
2.	Prepare all the required journal entries for 2016 if the plan is not funded.

Prepare the entries to record:

1.	the prior service cost on January 1.
2.	the postretirement benefit expense for 2016 on December 31.
3.	the payments to retired employees during 2016 on December 31.
4.	the amortization of prior service cost on December 31.

PAGE 1

GENERAL JOURNAL

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1
2
3
4
5
6
7
8

Analysis

Compute the OPRB expense for 2016 if the company uses the average remaining service life to amortize the prior service cost.

OPRB expense: _______________

please explain in depth:

Explain what method is used to account for investments in equity securities with 20% to 50% ownership. Briefly describe how dividends received and share of net income are accounted for under this method

Exercise 8-14 Sales and Production Budgets [LO8-2, LO8-3]

The marketing department of Jessi Corporation has submitted the following sales forecast for the upcoming fiscal year (all sales are on account):

	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter
Budgeted unit sales	12,500	13,500	15,500	14,500

The selling price of the company’s product is $24 per unit. Management expects to collect 75% of sales in the quarter in which the sales are made, 20% in the following quarter, and 5% of sales are expected to be uncollectible. The beginning balance of accounts receivable, all of which is expected to be collected in the first quarter, is $73,200.

The company expects to start the first quarter with 2,500 units in finished goods inventory. Management desires an ending finished goods inventory in each quarter equal to 20% of the next quarter’s budgeted sales. The desired ending finished goods inventory for the fourth quarter is 2,700 units.

Required:

1. Calculate the estimated sales for each quarter of the fiscal year and for the year as a whole.

2. Calculate the expected cash collections for each quarter of the fiscal year and for the year as a whole.

3. Calculate the required production in units of finished goods for each quarter of the fiscal year and for the year as a whole.

Calculate the estimated sales for each quarter of the fiscal year and for the year as a whole.

	1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Total sales $300,000 $324,000 $372,000 $348,000 $1,344,000

Requirement 2

	1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Total cash collections

Requirement 3

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Required production in units