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

Guillaume 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 46,000 units and sold 41,000 units. The company's only product is sold for $260 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 $28 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.

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

The Dorset Corporation produces and sells a single product. The following data refer to the year just completed: Assume that direct labor is a variable cost.Required:a. Compute the unit product cost under both the absorption costing and variable costing approaches.b. Prepare an income statement for the year using absorption costing.c. Prepare an income statement for the year using variable costing.d. Reconcile the absorption costing and variable costing net operating income figures in (b) and (c) above.

The costing method that treats all fixed costs as period costs is:

Helmers Corporation manufactures a single product. Variable costing net operating income last year was $86,000 and this year was $103,000. Last year, $32,000 in fixed manufacturing overhead costs were released from inventory under absorption costing. This year, $12,000 in fixed manufacturing overhead costs were deferred in inventory under absorption costing.What was the absorption costing net operating income last year?

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?(For all requirements, do not round intermediate calculations. Round your answer to the nearest whole dollar amount.)

Qadir Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Required:a. What is the unit product cost for the month under variable costing?b. Prepare a contribution format income statement for the month using variable costing.c. Without preparing an income statement, determine the absorption costing net operating income for the month.

Nurre Corporation manufactures and sells one product. In the company's first year of operations, the variable cost consisted solely of direct materials of $88 per unit. The annual fixed costs were $729,000 of direct labor cost, $1,917,000 of fixed manufacturing overhead expense, and $814,000 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 27,000 units and sold 22,000 units. The company's only product is sold for $247 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 an absorption costing system that assigns $27 of direct labor cost and $71 of fixed manufacturing overhead to each unit that is produced. Compute the unit product cost for the year and prepare an income statement for the year.

Super-variable costing is most appropriate where:

Woodall 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 46,000 units and sold 44,000 units. The company's only product is sold for $235 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 $14 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. Assume that the company uses an absorption costing system that assigns $14 of direct labor cost and $56 of fixed manufacturing overhead to each unit that is produced. Compute the unit product cost for the year and prepare an income statement for the year.d. Prepare a reconciliation that explains the difference between the super-variable costing and variable costing net incomes. e. Prepare a reconciliation that explains the difference between the super-variable costing and absorption costing net incomes.

Spiess Corporation has two major business segments--Apparel and Accessories. Data concerning those segments for December appear below: Common fixed expenses totaled $457,000 and were allocated as follows: $163,000 to the Apparel business segment and $294,000 to the Accessories business segment.Required:Prepare a segmented income statement in the contribution format for the company.

Allocating common fixed expenses to business segments:

Nantor Corporation has two divisions, Southern and Northern. The following information was taken from last year's income statement segmented by division: Net operating income last year for Nantor Corporation was $440,000.In last year's income statement segmented by division, what were Nantor's total common fixed expenses?

Tremble 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 49,000 units and sold 45,000 units. The company's only product is sold for $233 per unit.The net operating income for the year under super-variable costing is:

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

Net operating income computed under variable costing would exceed net operating income computed using absorption costing if:

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 absorption costing?

Beamish 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 absorption costing unit product cost was:

Ing 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?

Wyrich Corporation has two divisions: Blue Division and Gold Division. The following report is for the most recent operating period: The Blue Division's break-even sales is closest to: