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

Croft Corporation produces a single product.Last year,the company had a net operating income of $160,000 using absorption costing and $149,000 using variable costing.The fixed manufacturing overhead cost was $10 per unit.There were no beginning inventories.If 43,000 units were produced last year,then sales last year were:

Baughn 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?

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:

Moises Corporation manufactures a single product.Last year,the company's variable costing net operating income was $68,000 and ending inventory decreased by 900 units.Fixed manufacturing overhead cost per unit was $6 in both beginning and ending inventory. Required: Determine the absorption costing net operating income for last year.Show your work!

Assuming the LIFO inventory flow assumption,when production exceeds sales for the period,absorption costing net operating income will exceed variable costing net operating income.

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

Uchimura Corporation has two divisions: the AFE Division and the GBI Division.The corporation's net operating income is $42,000.The AFE Division's divisional segment margin is $15,700 and the GBI Division's divisional segment margin is $175,400.What is the amount of the common fixed expense not traceable to the individual divisions?

Eyestone Corporation has two divisions,A and B.The following data pertain to operations in October: If common fixed expenses were $17,000,total fixed expenses were:

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?

Chang Corporation has two divisions,T and W.The company's overall contribution margin ratio is 40%,with sales in the two divisions totaling $900,000.If variable expenses are $200,000 in Division T and if Division W's contribution margin ratio is 20%,the sales in Division W must be:

Moskowitz 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:

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?

When using data from a segmented income statement,the dollar sales for a segment to break even is equal to:

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 absorption costing?

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 Wholesale Division's break-even sales 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?

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?

Miller Corporation produces a single product.The company had the following results for its first two years of operation: In Year 1,the company produced and sold 40,000 units of its only product; in Year 2,the company again sold 40,000 units,but increased production to 50,000 units.The company's variable production cost is $5 per unit and its fixed manufacturing overhead cost is $600,000 a year.Fixed manufacturing overhead costs are applied to the product on the basis of each year's unit production (i.e.,a new fixed manufacturing overhead rate is computed each year).Variable selling and administrative expenses are $2 per unit sold. Required: a.Compute the unit product cost for each year under absorption costing and under variable costing. b.Prepare a contribution format income statement for each year using variable costing. c.Reconcile the variable costing and absorption costing income figures for each year. d.Explain why the net operating income for Year 2 under absorption costing was higher than the net operating income for Year 1,although the same number of units were sold in each year.

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 segment margin of the East business segment is:

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