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Exam 7: Variable Costing and Segment Reporting: Tools for Management

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Exam 1: Managerial Accounting and Cost Concepts299 Questionsadd course
Exam 2: Job-Order Costing: Calculating Unit Product Costs292 Questionsadd course
Exam 3: Job-Order Costing: Cost Flows and External Reporting256 Questionsadd course
Exam 4: Activity-Based Costing230 Questionsadd course
Exam 5: Process Costing6 Cost-Volume-Profit Relationships139 Questionsadd course
Exam 6: Cost-Volume-Profit Relationships260 Questionsadd course
Exam 7: Variable Costing and Segment Reporting: Tools for Management291 Questionsadd course
Exam 8: Master Budgeting236 Questionsadd course
Exam 10: Performance Measurement in Decentralized Organizations180 Questionsadd course
Exam 11: Differential Analysis: The Key to Decision Making203 Questionsadd course
Exam 12: Capital Budgeting Decisions179 Questionsadd course
Exam 9: Flexible Budgets Standard Costs and Variance Analysis461 Questionsadd course
Exam 13: Statement of Cash Flows132 Questionsadd course
Exam 14: Financial Statement Analysis289 Questionsadd course
Exam 15: Job-Order Costing: Cost Flows and External Reporting28 Questionsadd course
Exam 16: Process Costing6 Cost-Volume-Profit Relationships100 Questionsadd course
Exam 17: Cost-Volume-Profit Relationships82 Questionsadd course
Exam 18:Flexible Budgets, Standard Costs, and Variance Analysis177 Questionsadd course
Exam 19: Flexible Budgets, Standard Costs, and Variance Analysis140 Questionsadd course
Exam 20: A Capital Budgeting Decisions16 Questionsadd course
Exam 21: A Statement of Cash Flows56 Questionsadd course
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Fowler Corporation manufactures a single product.Operating data for the company and its absorption costing income statements for the last two years are presented below: Fowler Corporation manufactures a single product.Operating data for the company and its absorption costing income statements for the last two years are presented below: Variable manufacturing costs are $6 per unit.Fixed manufacturing overhead totals $72,000 in each year.This fixed manufacturing overhead is applied at the rate of $4 per unit.Variable selling and administrative expenses are $2 per unit sold. Required: a.Compute the unit product cost in each year under variable costing. b.Prepare new income statements for each year using variable costing. c.Reconcile the absorption costing and variable costing net operating income for each year. Fowler Corporation manufactures a single product.Operating data for the company and its absorption costing income statements for the last two years are presented below: Variable manufacturing costs are $6 per unit.Fixed manufacturing overhead totals $72,000 in each year.This fixed manufacturing overhead is applied at the rate of $4 per unit.Variable selling and administrative expenses are $2 per unit sold. Required: a.Compute the unit product cost in each year under variable costing. b.Prepare new income statements for each year using variable costing. c.Reconcile the absorption costing and variable costing net operating income for each year. Variable manufacturing costs are $6 per unit.Fixed manufacturing overhead totals $72,000 in each year.This fixed manufacturing overhead is applied at the rate of $4 per unit.Variable selling and administrative expenses are $2 per unit sold. Required: a.Compute the unit product cost in each year under variable costing. b.Prepare new income statements for each year using variable costing. c.Reconcile the absorption costing and variable costing net operating income for each year.

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Question 1
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a.The unit product cost under variable costing is the variable manufacturing cost of $6 per unit and is the same in each year.
b.Fixed selling and administrative expense = Total selling and administrative expense - Variable selling and administrative expense = $80,000 - ($2 per unit × 15,000 units)= $50,000 a.The unit product cost under variable costing is the variable manufacturing cost of $6 per unit and is the same in each year. b.Fixed selling and administrative expense = Total selling and administrative expense - Variable selling and administrative expense = $80,000 - ($2 per unit × 15,000 units)= $50,000 c.Reconciliation Year 1: Manufacturing overhead deferred in (released from)inventory = Fixed manufacturing overhead in ending inventory - Fixed manufacturing overhead in beginning inventory = ($4 per unit × 3,000 units)- $0 = $12,000 Year 2: Manufacturing overhead deferred in (released from)inventory = Fixed manufacturing overhead in ending inventory - Fixed manufacturing overhead in beginning inventory = ($4 per unit × 1,000 units)- ($4 per unit × 3,000 units)= -$8,000 c.Reconciliation a.The unit product cost under variable costing is the variable manufacturing cost of $6 per unit and is the same in each year. b.Fixed selling and administrative expense = Total selling and administrative expense - Variable selling and administrative expense = $80,000 - ($2 per unit × 15,000 units)= $50,000 c.Reconciliation Year 1: Manufacturing overhead deferred in (released from)inventory = Fixed manufacturing overhead in ending inventory - Fixed manufacturing overhead in beginning inventory = ($4 per unit × 3,000 units)- $0 = $12,000 Year 2: Manufacturing overhead deferred in (released from)inventory = Fixed manufacturing overhead in ending inventory - Fixed manufacturing overhead in beginning inventory = ($4 per unit × 1,000 units)- ($4 per unit × 3,000 units)= -$8,000

Year 1:
Manufacturing overhead deferred in (released from)inventory = Fixed manufacturing overhead in ending inventory - Fixed manufacturing overhead in beginning inventory = ($4 per unit × 3,000 units)- $0 = $12,000

Year 2:
Manufacturing overhead deferred in (released from)inventory = Fixed manufacturing overhead in ending inventory - Fixed manufacturing overhead in beginning inventory = ($4 per unit × 1,000 units)- ($4 per unit × 3,000 units)= -$8,000 a.The unit product cost under variable costing is the variable manufacturing cost of $6 per unit and is the same in each year. b.Fixed selling and administrative expense = Total selling and administrative expense - Variable selling and administrative expense = $80,000 - ($2 per unit × 15,000 units)= $50,000 c.Reconciliation Year 1: Manufacturing overhead deferred in (released from)inventory = Fixed manufacturing overhead in ending inventory - Fixed manufacturing overhead in beginning inventory = ($4 per unit × 3,000 units)- $0 = $12,000 Year 2: Manufacturing overhead deferred in (released from)inventory = Fixed manufacturing overhead in ending inventory - Fixed manufacturing overhead in beginning inventory = ($4 per unit × 1,000 units)- ($4 per unit × 3,000 units)= -$8,000

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?

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C

A cost that would be included in product costs under both absorption costing and variable costing is:

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C

Kaaua Corporation has provided the following data for its two most recent years of operation: Kaaua Corporation has provided the following data for its two most recent years of operation: Which of the following statements is true for Year 2? Kaaua Corporation has provided the following data for its two most recent years of operation: Which of the following statements is true for Year 2? Which of the following statements is true for Year 2?

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Question 4

The total contribution margin for the month under variable costing is:

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Question 5

What is the unit product cost for the month under absorption costing?

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Question 6

Under absorption costing, the unit product cost is:

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Question 7

The Consumer Division's break-even sales is closest to:

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Question 8

Nelter Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Nelter 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. Required: a.Prepare a contribution format income statement for the month using variable costing. b.Prepare an income statement for the month using absorption costing. 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. Required: a.Prepare a contribution format income statement for the month using variable costing. b.Prepare an income statement for the month using absorption costing.

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Question 9

The unit product cost under absorption costing in Year 2 is closest to:

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Question 10

A properly constructed segmented income statement in a contribution format would show that the segment margin of the Consumer business segment is:

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Question 11

What is the total period cost for the month under variable costing?

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Question 12

The unit product cost under absorption costing is:

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Question 13

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

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Question 14

What was the absorption costing net operating income last year?

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Question 15

Else Corporation has provided the following data for its two most recent years of operation: Else Corporation has provided the following data for its two most recent years of operation: Required: a.Assume the company uses absorption costing.Compute the unit product cost in each year. b.Assume the company uses variable costing.Compute the unit product cost in each year. Else Corporation has provided the following data for its two most recent years of operation: Required: a.Assume the company uses absorption costing.Compute the unit product cost in each year. b.Assume the company uses variable costing.Compute the unit product cost in each year. Required: a.Assume the company uses absorption costing.Compute the unit product cost in each year. b.Assume the company uses variable costing.Compute the unit product cost in each year.

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Question 16

What is the unit product cost for the month under variable costing?

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Question 17

The net operating income (loss)under absorption costing is closest to:

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Question 18

The company's overall break-even sales is closest to:

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Question 19

Allocating common fixed costs to segments on segmented income statements increases the usefulness of such statements.

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