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

When computing the break even for a segment, the calculations include the company's common fixed expenses.

Common fixed expenses should not be allocated to business segments when performing break-even calculations and making decisions.

Kneeland Corporation has two divisions: Grocery Division and Convenience 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 Grocery Division's break-even in sales dollars? b.What is the Convenience Division's break-even in sales dollars? c.What is the company's overall break-even in sales dollars? d.What would be the company's overall net operating income if the company operated at its two division's break-even points?

Which of the following statements is true for Year 2?

Mccrone Corporation has provided the following data for its two most recent years of operation: The net operating income (loss)under variable costing in Year 1 is closest to:

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.

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

Carlton Corporation has two divisions: Delta and Echo.Data from the most recent month appear below: The company's common fixed expenses total $44,110.The break-even in sales dollars for Echo Division is closest to:

The unit product cost under absorption costing in Year 1 is closest to:

The contribution margin of the South business segment is:

What is the net operating income for the month under absorption costing?