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

Union 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 24,000 units and sold 17,000 units. The company's only product is sold for $232 per unit.Assume that the company uses an absorption costing system that assigns $22 of direct labor cost and $68 of fixed manufacturing overhead to each unit that is produced. The net operating income under this costing system is:

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 absorption costing?

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

Kray Incorporated, which produces a single product, has provided the following data for its most recent month of operations: There were no beginning or ending inventories. The variable costing unit product cost was:

Under the LIFO inventory flow assumption, if the number of units in inventories increase between the beginning and end of the period, absorption costing net operating income will generally be greater than variable costing net operating income.

Zable Corporation has two divisions: Town Division and Country Division. The following report is for the most recent operating period: The company's common fixed expenses total $68,320.Required:a. What is the Town Division's break-even in sales dollars?b. What is the Country Division's break-even in sales dollars?c. What is the company's overall break-even in sales dollars?

Baraban Corporation has provided the following data for its most recent year of operation: The unit product cost under absorption costing 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:

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.Sales in Store J totaled:

Dallavalle 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 32,000 units and sold 31,000 units. The company's only product is sold for $238 per unit.Assume that the company uses an absorption costing system that assigns $10 of direct labor cost and $67 of fixed manufacturing overhead to each unit that is produced. The unit product cost under this costing system 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 68,000 units and sold 65,600 units. The company's only product is sold for $178 per unit.Required: a-1. Assume the company uses super-variable costing. Compute the unit product cost for the year. a-2. Prepare an income statement for the year. b-1. Assume that the company uses a variable costing system that assigns $16 of direct labor cost to each unit that is produced. Compute the unit product cost for the year. b-2. 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.

Therrell Corporation has two divisions: Bulb Division and Seed 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.Required:a. What is the Bulb Division's break-even in sales dollars?b. What is the Seed Division's break-even in sales dollars?c. What is the company's overall break-even in sales dollars?

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 $103,360.The company's overall break-even sales is closest to:

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.Assume that the company uses a variable costing system that assigns $23 of direct labor cost to each unit that is produced. The unit product cost under this costing system is:

Drucker Corporation manufactures and sells one product. In the company's first year of operations, the variable cost consisted solely of direct materials of $84 per unit. The annual fixed costs were $288,000 of direct labor cost, $1,728,000 of fixed manufacturing overhead expense, and $782,000 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 24,000 units and sold 17,000 units. The company's only product is sold for $249 per unit. Required:a. Assume the company uses super-variable costing. Compute the unit product cost for the year. b. Assume the company uses super-variable costing. Prepare an income statement for the year.

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

Azuki Corporation operates in two sales territories, Urban and Rural. Data concerning last year's operations appear below: Azuki's common fixed expenses were $25,000 last year.If operations in the Rural Sales Territory would have been discontinued at the beginning of last year, how would this have changed the net operating income of Azuki Corporation as a whole?

Spiess Corporation has two major business segments--Apparel and Accessories. Data concerning those segments for December appear below: Common fixed expenses totaled $309,000 and were allocated as follows: $142,000 to the Apparel business segment and $167,000 to the Accessories business segment.Required:Prepare a segmented income statement in the contribution format for the company. Omit percentages; show only dollar amounts.

Muckleroy Corporation has two divisions: Division K and Division L. 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 K is closest to:

Beach Corporation, which produces a single product, budgeted the following costs for its first year of operations. These costs are based on a budgeted volume of 30,000 towels produced and sold: During the first year of operations, Beach Corporation actually produced 30,000 towels but only sold 24,000 towels. Actual costs did not fluctuate from the cost behavior patterns described above. The 24,000 towels were sold for $16 per towel. Assume that direct labor is a variable cost.Under absorption costing, what is Beach Corporation's actual net operating income for its first year?