Exam 21: Variable Costing

Voltice Services provides event management services.The company has three employees,each assigned to specific customers.The company considers each employee's territory as a business segment.The following data relates to its three segments for the month of June: The business segments had the following number of customers: Barney,25; Margaret,30; and Owen,35.The total fixed costs for the month of June amounts to $3,500.Which business segment was the most profitable?

Absorption costing is used to analyze contribution margin.

Absorption costing is the only method used in short-term decision making.

Zertrax Inc.reports the following information for July: What is the total fixed cost as per variable costing?

Fixed manufacturing overhead is considered a product cost under variable costing.

Fasetech Inc.has collected the following data for November (there are no beginning inventories): What is the ending balance in finished goods inventory using absorption costing if 450 units are sold?

Which of the following is true of the traditional format of the income statement?

Absorption costing is more appropriate than variable costing for making decisions relating to expansion of production capacity of a plant.

A business segment is an identifiable part of the company for which financial information is available.

Venlite Inc.produces and sells cosmetic products.Currently,the company is operating at 70% of its capacity.The selling price of its product is $30 per unit and it incurs a full cost of $25 to produce each unit.Its yearly fixed manufacturing overhead amounts to $20,000.The company has received a one-time order for supplying 5,000 units at $26 per unit.This order can be executed within the excess production capacity and will not involve any additional costs.To make this decision,the management of Venlite should use ________.

In absorption costing,all product costs are recorded first as assets in the inventory accounts.

Groovelex Inc.reports the following information: What is the unit product cost using variable costing?

Welcome Services Inc.provides catering services.The company has three segments-Standard,Deluxe,and Premium.The company provides the following data for its three segments for the month of July: The business segments had the following number of customers: Standard,30; Deluxe,20; and Premium,40.The total fixed costs for the month amounts to $2,500. Requirements: a)Calculate the contribution margin ratio for each business segment. b)Compute the service revenue per customer,variable cost per customer,and contribution margin per customer for each business segment.

Which of the following will appear as a line item in the traditional format of an income statement?

Contribution margin is calculated by deducting the total cost of goods sold from sales revenue.

Edge Inc.had two products-Le Chaud and Le Frais.Financial data for both the products follow: It had two sale executives-Jack and Peter.Each of them sold a total of 1,500 units during the month of March,2015.Jack had a sales mix of 70% Le Chaud and 30% Le Frais.Peter had a sales mix of 60% Le Chaud and 40% Le Frais.Which sales representative has the highest contribution ratio? Explain the reason for your answer.(Round your percent answers to two decimal places.)

Nice Aqua Inc.has provided the following information for the year 2013. -What is the unit product cost using absorption costing?

Edge Inc.had two products-Le Chaud and Le Frais.Financial data for both the products follow: It had two sale executives-Jack Lynch and Peter Cho.Each of them sold a total of 1,500 units during the month of March,2015.Jack had a sales mix of 70% Le Chaud and 30% Le Frais.Peter had a sales mix of 60% Le Chaud and 40% Le Frais.Based on the above information,calculate Peter's total contribution to company profits?

E-trax Inc.has provided the following financial information for the year 2015: What is the unit product cost for 2015 using absorption costing?

Zot-Ice Corp.has provided the following data for the current year. Calculate the unit product cost using absorption costing and variable costing.