Sage Corporation is a diversified company that operates in five different industries: A, B, C, D, and E. The following information relating to each segment is available for 2018.

A B C D E

Sales revenue $40,600 $75,500 $571,400 $34,700 $56,000

Cost of goods sold 19,000 49,000 265,800 18,900 30,300

Operating expenses 9,900 39,800 231,800 12,300 17,900

Total expenses 28,900 88,800 497,600 31,200 48,200

Operating profit (loss) $11,700 $(13,300) $73,800 $3,500 $7,800

Identifiable assets $35,500 $80,300 $499,500 $65,800 $49,400

Sales of segments B and C included intersegment sales of $20,100 and $100,400, respectively.

(a) Determine which of the segments are reportable based on the: Reportable Segment (1) Revenue test. (2) Operating profit (loss) test. (3) Identifiable assets test. (b) Prepare the necessary disclosures required by GAAP. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

A B C

Other Totals External Revenues $ $ $ $ $

Intersegment Revenues

Total Revenues $

Cost of Goods Sold

Operating Expenses

Total Expenses

Operating Profit (Loss) $ $ $ $ $

Identifiable Assets $ $ $ $ $

Listed below are ten separate situations. For each item indicate whether the difference is (1) temporary creating a deferred tax asset (DTA) or a deferred tax liability (DTL) or (2) permanent by marking an X in the appropriate column.

Milano Pizza is a small neighborhood pizzeria that has a small area for in-store dining as well as offering take-out and free home delivery services. The pizzeria’s owner has determined that the shop has two major cost drivers—the number of pizzas sold and the number of deliveries made.

The pizzeria’s cost formulas appear below:

In November, the pizzeria budgeted for 2,160 pizzas at an average selling price of $19 per pizza and for 180 deliveries.

Data concerning the pizzeria’s actual results in November appear below:

Required:

1. Complete the flexible budget performance report that shows both revenue and spending variances and activity variances for the pizzeria for November.

On January 1, 2017, the ledger of Sheridan Company contained these liability accounts. Accounts Payable $44,300 Sales Taxes Payable 7,500 Unearned Service Revenue 20,800 During January, the following selected transactions occurred. Jan. 1 Borrowed $18,000 in cash from Apex Bank on a 4-month, 5%, $18,000 note. 5 Sold merchandise for cash totaling $6,254, which includes 6% sales taxes. 12 Performed services for customers who had made advance payments of $12,500. (Credit Service Revenue.) 14 Paid state treasurer’s department for sales taxes collected in December 2016, $7,500. 20 Sold 680 units of a new product on credit at $53 per unit, plus 6% sales tax. During January, the company’s employees earned wages of $70,300. Withholdings related to these wages were $5,378 for Social Security (FICA), $5,021 for federal income tax, and $1,506 for state income tax. The company owed no money related to these earnings for federal or state unemployment tax. Assume that wages earned during January will be paid during February. No entry had been recorded for wages or payroll tax expense as of January 31.

1.By definition, price discrimination is when people are charged different prices based on their ethnicity, race or gender.

True

False

2.All theoretical monopolists are assumed to be able to price discriminate.

True

False

3.In a perfectly competitive market, as described in the Mankiw text, each firm has an incentive to watch the behavior of other competitive firms in the market, and to adjust to the behavior of other individual firms.

True

False

4.Standard Economic theory as presented in the text by Mankiw suggests that the firm should produce a positive amount of output so long as average sunk costs are below marginal revenue.

True

False

5.if Average Fixed Cost is falling, then Average Total Cost must also be falling as output increases.  

True

False

6.If a profit maximizing theoretical competitive firm (as described in the Mankiw text) has total revenue larger than average variable costs, but smaller than average total cost; then it is earning negative profit, but will NOT shut down in the short run.

True

False

7.If average total cost is falling as output increases, then marginal cost must be falling as well.

True

False

8.Sunk costs are one component of the Marginal Cost

True

False

Vulcan Flyovers offers scenic overflights of Mount St. Helens, the volcano in Washington State that explosively erupted in 1982. Data concerning the company’s operations in July appear below:

The company measures its activity in terms of flights. Customers can buy individual tickets for overflights or hire an entire plane for an overflight at a discount.

Required:

1. Prepare a flexible budget performance report for July that includes revenue and spending variances and activity variances. (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.)