Please Show all work for all subsections(A-D) of both problems(Ravena Labs and O
ID: 2371690 • Letter: P
Question
Please Show all work for all subsections(A-D) of both problems(Ravena Labs and Orgeron Corporation) or no points will be awarded.
(Give formulas, plug numbers, then give answers to be sufficient)
1. Ravena Labs., Inc. makes a single product which has the following standards:
Direct materials
2.5 ounces at $20 per ounce
Direct labor
1.4 hours at $12.50 per hour
3,750 units of compound were produced during the month.
There was no beginning direct materials inventory.
The ending direct materials inventory was 2,000 ounces.
Direct materials purchased: 12,000 ounces for $225,000.
Direct labor hours worked: 5,600 hours at a cost of $67,200.
A. The direct materials price variance for October is:
B. The direct materials quantity variance for October is:
C. The direct labor rate variance for October is:
D. The direct labor efficiency variance for October is:
2. Orgeron Corporation's most recent balance sheet and income statement appear below:
Statement of Financial Position
December 31, Year 2 and Year 1
(in thousands of dollars)
Assets
Year 2
Year 1
Current assets:
Cash
$ 260
$ 120
Accounts receivable
160
190
Inventory
180
160
Prepaid expenses
60
70
Total current assets
660
540
Plant and equipment, net
680
750
Total assets
$1,340
$1,290
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$ 170
$ 150
Accrued liabilities
40
40
Notes payable, short term
80
90
Total current liabilities
290
280
Bonds payable
290
300
Total liabilities
580
580
Stockholders’ equity:
Preferred stock, $100 par value, 5%
100
100
Common stock, $2 par value
200
200
Additional paid-in capital–common stock
100
100
Retained earnings
360
310
Total stockholders’ equity
760
710
Total liabilities & stockholders’ equity
$1,340
$1,290
Income Statement
For the Year Ended December 31, Year 2
(in thousands of dollars)
Sales (all on account)
$1,260
Cost of goods sold
800
Gross margin
460
Selling and administrative expense
272
Net operating income
188
Interest expense
38
Net income before taxes
150
Income taxes (30%)
45
Net income
$ 105
Compute the following for Year 2:
A. Working capital.
B. Current ratio.
C. Acid-test ratio.
D Accounts receivable turnover.
Direct materials
2.5 ounces at $20 per ounce
Direct labor
1.4 hours at $12.50 per hour
Explanation / Answer
1. A. $15,000F ($20/oz. * 12000oz) = $240,000 [what they expected to pay] $240,000 - $225,000 = $15,000F [compare what they expected to pay to what they actually paid] B. 625U units 2.5 oz/unit * 3750 units = 9375 units [units they expected to need] 12,000
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