Exam 4: Variable Costing and Segment Reporting: Tools for Management

Ross Corporation produces a single product. The company has direct materials costs of $8 per unit, direct labor costs of $6 per unit, and manufacturing overhead of $10 per unit. Sixty percent of the manufacturing overhead is for fixed costs. In addition, variable selling and administrative expenses are $2 per unit, and fixed selling and administrative expenses are $3 per unit at the current activity level. Assume that direct labor is a variable cost. Under absorption costing, the unit product cost is:

Gabuat Corporation, which has only one product, has provided the following data concerning its most recent month of operations: The total gross margin for the month under the absorption costing approach is:

Jemmott Corporation has two divisions: Western Division and Eastern Division. The following report is for the most recent operating period: The common fixed expenses have been allocated to the divisions on the basis of sales. The Western Division's break-even sales is closest to:

Tat Corporation produces a single product and has the following cost structure: The unit product cost under variable costing is:

Tubaugh Corporation has two major business segments--East and West. In December, the East business segment had sales revenues of $690,000, variable expenses of $352,000, and traceable fixed expenses of $104,000. During the same month, the West business segment had sales revenues of $140,000, variable expenses of $56,000, and traceable fixed expenses of $24,000. The common fixed expenses totaled $162,000 and were allocated as follows: $89,000 to the East business segment and $73,000 to the West business segment. The contribution margin of the West business segment is:

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

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

Under variable costing, an increase in fixed manufacturing overhead will affect the unit product cost.

Tustin Corporation has provided the following data for its two most recent years of operation: The net operating income (loss) under absorption costing in Year 2 is closest to:

Delisa Corporation has two divisions: Division L and Division Q. Data from the most recent month appear below: The break-even in sales dollars for Division Q is closest to:

Farris Corporation, which has only one product, has provided the following data concerning its most recent month of operations: What is the unit product cost for the month under variable costing?

Neef Corporation has provided the following data for its two most recent years of operation: The unit product cost under absorption costing in Year 1 is closest to:

Last year, Kirsten Corporation's variable costing net operating income was $63,400. Fixed manufacturing overhead costs released from inventory under absorption costing amounted to $10,700. What was the absorption costing net operating income last year?

A company has two divisions, each selling several products. If segment reports are prepared for each product, the division managers' salaries should be considered as common fixed costs of the products.

Absorption costing treats all fixed costs as product costs.

Columbia Corporation produces a single product. The company's variable costing income statement for November appears below: During November, 35,000 units were manufactured and 8,000 units were in beginning inventory. Variable production costs have remained constant on a per unit basis over the past several months. Under absorption costing, for November the company would report a:

Shun Corporation manufactures and sells a hand held calculator. The following information relates to Shun's operations for last year: What is Shun's absorption costing unit product cost for last year?

Allocating common fixed expenses to business segments:

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:

Nuzum Corporation has two divisions: Division M and Division N. Data from the most recent month appear below: Management has allocated common fixed expenses to the Divisions based on their sales. The break-even in sales dollars for Division N is closest to: