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

Labadie Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 25,000 units and sold 22,000 units. The company's only product is sold for $251 per unit.The company is considering using either super-variable costing or a variable costing system that assigns $23 of direct labor cost to each unit that is produced. Which of the following statements is true regarding the net operating income in the first year?

When reconciling variable costing and absorption costing net operating income, fixed manufacturing overhead costs deferred in inventory under absorption costing should be deducted from variable costing net operating income to arrive at the absorption costing net operating income.

Which of the following will usually be found on an income statement prepared using absorption costing?

Truo Corporation produces a single product. Last year, the company had net operating income of $100,000 using variable costing. Beginning and ending inventories were 13,000 units and 18,000 units, respectively. If the fixed manufacturing overhead cost was $4 per unit both last year and this year, what would have been the net operating income using absorption costing?

Pavelko 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:

Bertie Corporation has two divisions: Retail Division and Wholesale Division. The following data are for the most recent operating period: The common fixed expenses of the company are $65,400.The Wholesale Division's break-even sales is closest to:

J Corporation has two divisions. Division A has a contribution margin of $79,300 and Division B has a contribution margin of $126,200. If total traceable fixed expenses are $72,400 and total common fixed expenses are $34,900, what is J Corporation's net operating income?

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.The contribution margin of the South business segment is:

All differences between super-variable costing and variable costing net operating income are explained by the accounting for manufacturing overhead costs.

Ferrar Corporation has two major business segments: Consumer and Commercial. Data for the segments and for the company for March appear below: In addition, common fixed expenses totaled $210,000 and were allocated as follows: $122,000 to the Consumer business segment and $88,000 to the Commercial business segment.The contribution margin of the Commercial business segment is:

Columbia Corporation produces a single product. The company's variable costing income statement for November appears below: During November, 35,750 units were manufactured and 8,340 units were in beginning inventory. Variable production costs per unit, total fixed manufacturing expenses, and the number of units produced were the same in prior months.The value of the company's inventory on November 30 under absorption costing would be:

Wolanski Corporation has provided the following data for its most recent year of operations: Which of the following statements is true?

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.A properly constructed segmented income statement in a contribution format would show that the net operating income of the company as a whole is:

Valcarcel Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 31,000 units and sold 25,000 units. The company's only product is sold for $233 per unit.Required: a. Assume the company uses super-variable costing. Compute the unit product cost for the year and prepare an income statement for the year.b. Assume that the company uses a variable costing system that assigns $13 of direct labor cost to each unit that is produced. Compute the unit product cost for the year and prepare an income statement for the year.c. Prepare a reconciliation that explains the difference between the super-variable costing and variable costing net incomes.

All other things the same, if a division's traceable fixed expenses decrease then the division's segment margin will decrease.

Combe Corporation has two divisions: Alpha and Beta. Data from the most recent month appear below: The company's common fixed expenses total $80,800. The break-even in sales dollars for Alpha Division is closest to:

Data for January for Bondi Corporation and its two major business segments, North and South, appear below: In addition, common fixed expenses totaled $154,000 and were allocated as follows: $80,000 to the North business segment and $74,000 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:

Souffront Corporation manufactures and sells one product. In the company's first year of operations, the variable cost consisted solely of direct materials of $102 per unit. The annual fixed costs were $1,488,900 of direct labor cost, $3,970,800 of fixed manufacturing overhead expense, and $1,735,200 of fixed selling and administrative expense. The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 61,800 units and sold 57,800 units. The company's only product is sold for $266 per unit. The net operating income for the year under super-variable costing is:

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 variable costing?

Farris 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?