Welcome to the Summer 2016 version of the comprehensive assignment prepared
specifically for Accounting 294.
Made up of 2 parts this assignment is meant to fulfill a number of objectives for you.
1) Test and apply your knowledge of the concepts of managerial accounting.
2) Increase your experience and abilities with respect to report writing.
3) Illustrate scenarios and issues you will face in the “real world”
4) Provide for an additional method of evaluation of your knowledge and skills
rather than the traditional quizzes and tests.
Please take all parts of this assignment seriously. This is an opportunity to actually apply
your knowledge rather than just memorize a textbook.
Please prepare the assignment using either Word or Excel rather than by hand. The
finished product will look more professional as well as create some consistency between
In order to make this assignment easier and your result more successful I suggest that you
do not leave this assignment to the last day or even week. The assignment parts are
constructed to coincide with the topics that have been or will be covered in class. If you
begin working on the assignment immediately then as your lectures/seminars progress
you will be immediately reinforcing the course content that you are being exposed to and
it will make application of that content easier as well.
The 2 parts of the assignment are worth a total of 14 % of your final grade and therefore
each part will have a significant effect on your final letter grade. Making a submission on
time even if incomplete, will be more to your benefit than giving up and not making any
submission at all.
Important Notes Regarding Student Conduct
Each part of this assignment is an individual assignment. All submissions are required
to be your own words and calculations. While it is recognized that students may discuss
concepts and ideas each student is required to construct their own response. In the event
that the responses prepared by individual students appear to be the same or highly similar
the instructor will consider referring the students to the Faculty of Management
Academic Integrity Committee for consideration.
- Plagiarism refers to the practice of presenting the words of another author (it may
be a text writer or another student) as your own. This is not permitted. At times
you will be asked to learn about and discuss the views or theories of others. This
should be done with appropriate acknowledgement of source materials. In other
words, you must reference your work. Acknowledge your sources – both direct
and indirect quotes – with in-text citations. Refer to the Referencing section
contained below for further information.
Academic Conduct Violations
- Any violation of the rules of Academic Conduct as described above will result in
the immediate confiscation of all related materials of all parties involved. In
addition, all parties will be immediately reported to the Faculty of Management
Academic Misconduct Committee for consideration of further actions including
(but not limited to) receiving a zero for the submission, a failure in the course and
the possibility of suspension or expulsion.
Faculty of Management (Business) requires the APA style of referencing for academic papers.
Resources for using APA are available from the VIU Writing Centre (Library, Room 474). You can
find their hours of operation and access to online student resources (including tutorials and a
printable Quick Guide) at: http://sites.viu.ca/writingcentre/.”
For further information please discuss with your instructor and/or refer to the
following Student Academic Code of Conduct
SxS Dune Adventures
Experience the Dunes and Sea, Side by Side
While you believe you are a student currently taking Accounting 294, for the
purposes of this assignment you are in fact an employee of SxS Dune
Adventures. SxS is a company located in Florence Oregon. The business has
2 focuses, rentals of Polaris Rzr’s and tours of the Oregon dunes located
between Florence, Oregon and North Bend, Oregon.
While this employment will provide you with varied experience, you are
about to be assigned work specifically related to the business. You have just
been hired by the owner, Sam Lownie(SL) of SxS because of your recently
acquired knowledge related to managerial accounting. He expects you to
write memos, perform quantitative and qualitative analysis as well as
providing conclusions or recommendations for the management and owners
of SxS Dune Adventures.
At all times, work submitted must be professional both in terms of content as
well as presentation. This is not high school or university but rather the real
world. Do the work as if your job depends on it, because it does!!
SxS Dune Adventures
SxS Dune Adventures is a privately owned company located in Florence,
Oregon in the United States. Florence is located on the coast about 60 miles
west of Eugene Oregon. Its locations is spectacular with the rugged Pacific
Ocean and the start of the world famous Oregon sand dunes heading to the
The sand dunes are what the company uses to generate its income. The
company has two separate revenue streams:
1) Rental of Polaris Side By Side (SxS) Utility Terrain Vehicles (UTV)
These are two seat vehicles meant to go off road through rough terrain
and on the sand dunes
2) Dune Tours in a 4 seat UTV.
Guided by experienced SxS staff, these tours allow people unable or
unwilling to rent and drive their own UTV to experience the thrill of
driving over the sand dunes and also speed along the beaches on the
edge of the Pacific.
Due to its location as well as the variety of activities, SxS Dune Adventures
has created a niche in the growing sand dune tourism market. The
management of SxS believe that outstanding customer service is the way to
differentiate their product from the competitors and by offering professional
guides, well planned and presented guest activities and quality experiences
SxS will continue to be recognized as the premier way to
“Experience the Dunes and Sea, Side by Side”.
The rentals and tours operate from June to September each year.
SxS Dune Adventures Ownership
SxS Dune Adventures is owned by Sam Lownie who put in $500,000 in
capital to start the company. While Sam has long time experience in the
industry he is lacking in financial knowledge which is why he hired you.
SxS Dune Adventures Management
Brian Beech (BB)
Brian is the operations manager of SxS. Brian’s previous experience
involved managing a variety of tour related businesses such as Klanawa
Nature Adventures which is an adventure facility located in British
Adam Farmer (AF)
Adam’s expertise is in the mechanics of utv’s and other all-terrain vehicles.
A graduate of the Recreational Power sports Mechanics program at the
Northern Alberta Institute of Technology (NAIT). Adam and his team of
technicians keep the equipment at SxS running smoothly.
The company location consists of a 6,000 square foot building with
approximately 1,500 square feet of office and administrative space, 3,000
square feet for the vehicle storage and maintenance and 1,500 square feet for
the customer service and training space.
Transcript of Meeting with Sam Lownie, Brian Beech, Adam
Farmer and Student
Student: Thank you very much for hiring me to assist you with your
operations. I am sure that my analysis and advice will be of great benefit to
your operations. I am very eager to get started.
SL: You came highly recommended as to both your knowledge and
problem solving skills. Our business has grown and I now realize that we
need a more professional approach to things. We still want to ensure the
quality of our services and our commitment to “Safety First” but we also
obviously want to make money. I think you can help us understand how to
do that. I would think that the first tasks we can get you to do will be to
assist in the analysis of past operations so that Brian, Adam and I can work
on improving things.
As you know our fiscal year just ended on March 31, 2016. Talking to Brian
the other day he thought it would be helpful to him if we took the financial
results to the end of September and provided some classification of the
amounts between types of costs. Specifically he wanted costs identified as
product/period costs, Fixed/variable, direct/indirect costs and sunk costs. I
understand what he means by each of these terms but to be honest, I have
not had the time to do it. I would like to know the total of each of these
categories as well as what makes each one up.
I have printed out a copy of the results to March 31, 2016 and also provided
a description of the costs (Exhibit 1). Would it be possible for you to look at
these costs and provide the analysis Brian wants?
Student- Definitely, in fact I have a format that I can follow in preparing this
analysis. (Exhibit 2)
BB- You are quite a knowledgeable individual so let me add 2 more
1) In order to a proper analysis of the business I need to be able to
prepare budgets. I cannot do that with the income statement in the
format in Exhibit 1. I need an income statement in a “Contribution
Margin” format. As you know in order to do this we need to separate
all costs into either a variable or fixed category. Sam has already
asked you to categorize the costs between fixed and variable.
In addition we need to separate the product costs between the 2
products we offer to our customers.
Please prepare an income statement for me in the contribution margin
See sample format in Exhibit 3
2) I have received a request from the Costco in Eugene asking if we can
host tours for the staff party coming up at Halloween, October 31. As
our regular business shuts down at the end of September we know that
we will have equipment available and I think the exposure that we can
get from doing this for Costco would be good marketing on our part.
I am not sure how much they are willing to pay but I would rather not
lose money on the deal despite the marketing benefit.
Using an incremental analysis approach, could you please tell me
what the lowest selling price we can offer Costco on this without
losing money on it is? I have provided additional information for you.
AF: Seeing how all of you are getting Student to do things I might as well
put in my request.
In preparing for next year I have had some discussions with both staff
and some of our suppliers. Each of them is proposing a significant
change in how they are paid but there is a similar theme to all of these
requests. Could you please do a memo for me explaining the issue of
cost structure and also provide an example on how it would affect our
operating income in the future? I have provided notes in Exhibit 5.
Student: I can certainly prepare the reports that each of you require. Is there
a deadline for all of this work? What date would you like it by?
SL- If you have it for May 19, 2016 that would be great.
1) Prepare an analysis of costs identifying product (direct materials, direct
labour, product overhead) /period costs, Fixed/variable, direct/indirect costs
and sunk costs. Provide the classification of each cost as well as a total of
each category. Cost information is provided in Exhibit 1.
For the “mixed” costs please use the information provided to separate them
into their variable and fixed components.
See Exhibit 2
2) Prepare an income statement in the contribution margin format based on
the sample provided in Exhibit 3.
3) Using an incremental analysis approach, calculate the lowest selling price
on the Costco job which allows the company to break even on the job
specifically. The details of the Costco proposal are in Exhibit 4
4) Prepare a memo to Adam explaining the issue of cost structure and
provide relevant examples on how it would potentially affect the company’s
operating income in the future? Adam’s notes are in Exhibit 5………………………………………………………………………….