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Exam 6: Variable Costing and Segment Reporting: Tools for Management

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Question 111

Multiple Choice

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The impact on net operating income of a small change in sales for a segment is best predicted by using:

A) the contribution margin ratio.
B) the segment margin.
C) the ratio of the segment margin to sales.
D) net sales less segment fixed costs.

E) A) and B)
F) A) and C)

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Question 112

True/False

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When using segmented income statements,the dollar sales for a company to break even equals the traceable fixed expenses divided by the overall CM ratio.

A) True
B) False

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Question 113

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Under variable costing,only variable production costs are treated as product costs.

Net operating income computed using absorption costing will always be less than net operating income computed using variable costing.

A company produces a single product.Variable production costs are $21 per unit and variable selling and administrative expenses are $4 per unit.Fixed manufacturing overhead totals $30.000 and fixed selling and administration expenses total $36.000.Assuming a beginning inventory of zero,production of 6,000 units and sales of 5,600 units,the dollar value of the ending inventory under variable costing would be:

Data for January for Bondi Corporation and its two major business segments, North and South, appear below: In addition, common fixed expenses totaled $179,000 and were allocated as follows: $93,000 to the North business segment and $86,000 to the South business segment. -A properly constructed segmented income statement in a contribution format would show that the segment margin of the North business segment is:

Elbrege Corporation manufactures a single product. The company has supplied the following data: There was no beginning inventory. During the year 25,000 units were produced and 20,000 units were sold. -What is the net operating income for the month under variable costing?

Corbett Corporation manufactures a single product.Last year,variable costing net operating income was $72,000.The fixed manufacturing overhead costs deferred in inventory under absorption costing amounted to $29,000. Required: Determine the absorption costing net operating income last year.Show your work!

Quates Corporation produces a single product and has the following cost structure: Required: Compute the unit product cost under absorption costing.Show your work!

Pungent Corporation manufactures and sells a spice rack.Shown below are the actual operating results for the first two years of operations: Pungent's selling price and unit variable cost and total fixed cost were the same for both years.What is Pungent's variable costing net operating income for Year 2?

Wolanski Corporation has provided the following data for its most recent year of operations: -The unit product cost under absorption costing is closest to:

Krepps Corporation produces a single product. Last year, Krepps manufactured 20,000 units and sold 15,000 units. Production costs for the year were as follows: Sales totaled $825,000 for the year, variable selling and administrative expenses totaled $108,000, and fixed selling and administrative expenses totaled $165,000. There was no beginning inventory. Assume that direct labor is a variable cost. -The contribution margin per unit was:

Nelter Corporation,which has only one product,has provided the following data concerning its most recent month of operations: The company produces the same number of units every month,although the sales in units vary from month to month.The company's variable costs per unit and total fixed costs have been constant from month to month. Required: a.Prepare a contribution format income statement for the month using variable costing. b.Prepare an income statement for the month using absorption costing.

Ieso Corporation has two stores: J and K. During November, Ieso Corporation reported a net operating income of $30,000 and sales of $450,000. The contribution margin in Store J was $100,000, or 40% of sales. The segment margin in Store K was $30,000, or 15% of sales. Traceable fixed expenses are $60,000 in Store J, and $40,000 in Store K. -Variable expenses in Store K totaled:

Aaron Corporation, which has only one product, has provided the following data concerning its most recent month of operations: -What is the net operating income for the month under variable costing?

Neef Corporation has provided the following data for its two most recent years of operation: -The net operating income (loss) under absorption costing in Year 1 is closest to:

Keyser Corporation, which has only one product, has provided the following data concerning its most recent month of operations: The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month. -What is the net operating income for the month under absorption costing?

Masley Corporation has provided the following data for its two most recent years of operation: In Year 1,10,000 units were produced and in Year 2,7,000 units were produced. Required: a.Assume the company uses absorption costing.Compute the unit product cost in each year. B.Assume the company uses variable costing.Compute the unit product cost in each year.

Gabuat Corporation, which has only one product, has provided the following data concerning its most recent month of operations: -The company's net operating income under variable costing would be:

The Southern Corporation manufactures a single product and has the following cost structure: Last year, 7,000 units were produced and 6,800 units were sold. There was no beginning inventory. -Under absorption costing,the cost of goods sold for the year would be: