Exam 4: Variable Costing and Segment Reporting: Tools for Management

Currently the sales clerks receive a salary of $17,000 per month in Store Q. A proposal has been made to change from a fixed salary to a sales commission of 5%. Assume that this proposal is adopted, and that as a result sales in Store Q increase by $40,000. The new segment margin for Store Q should be:

What was the absorption costing net operating income this year?

Sugiki Corporation has two divisions: the Alpha Division and the Delta Division. The Alpha Division has sales of $820,000, variable expenses of $369,000, and traceable fixed expenses of $347,300. The Delta Division has sales of $460,000, variable expenses of $294,400, and traceable fixed expenses of $134,100. The total amount of common fixed expenses not traceable to the individual divisions is $97,300. What is the company's net operating income?

O'Keefe Company, which has only one product, has provided the following data concerning its most recent month of operations: 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.

Olds Inc., 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:

The carrying value of finished goods inventory at the end of the year under variable costing would be:

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

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

A common cost that should not be assigned to a particular product on a segmented income statement is:

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

What is the total period cost for the month under the absorption costing approach?

Net operating income under the variable costing method for July would be:

The salary paid to a store manager is a traceable fixed expense of the store.

Salonia Corporation manufactures a variety of products. The following data pertain to the company's operations over the last two years: Required: a. Determine the absorption costing net operating income last year. Show your work! b. Determine the absorption costing net operating income this year. Show your work!

Stephen Company produces a single product. Last year, the company had 20,000 units in its ending inventory. During the year, Stephen's variable production costs were $12 per unit. The fixed manufacturing overhead cost was $8 per unit in the beginning inventory. The company's net operating income for the year was $9,600 higher under variable costing than it was under absorption costing. The company uses a last-in-first-out (LIFO) inventory flow assumption. Given these facts, the number of units of product in the beginning inventory last year must have been:

Under absorption costing, the cost of goods sold for the year would be:

Fixed costs that are traceable to a segment may become common if the segment is divided into smaller units.

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

If Store G sales increase by $40,000 with no change in fixed costs, the overall company net operating income should:

If sales in Store Q increase by $30,000 as a result of a $7,000 increase in traceable fixed costs: