Exam 11: Variable Costing and Segment Reporting: Tools for Management

A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations: The total gross margin for the month under absorption costing is:

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

What is the company's overall net operating income if it operates at the break-even points for its two divisions?

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

A company that produces a single product had a net operating income of $75,000 using variable costing and a net operating income of $95,000 using absorption costing. Total fixed manufacturing overhead was $50,000 and production was 10,000 units both this year and last year. Last year was the first year of operations. Between the beginning and the end of the year, the inventory level:

What is the total cost that would be assigned to Cutterski's finished goods inventory at the end of the first year of operations under variable costing?

Assuming the LIFO inventory flow assumption, if production is less than sales for the period, absorption costing net operating income will generally be greater than variable costing net operating income.

Koen Corporation has two divisions: Division A and B. Last month, the company reported a contribution margin of $50,000 for Division A. Division B had a contribution margin ratio of 30% and its sales were $250,000. Net operating income for the company was $30,000 and traceable fixed expenses were $50,000. Koen Corporation's common fixed expenses were:

The marketing department believes that a promotional campaign at Store A costing $6,000 will increase sales by $15,000. If its plan is adopted, overall company net operating income should:

If a cost must be arbitrarily allocated in order to be assigned to a particular segment, then that cost should not be considered a common cost.

Breedon Corporation produces a single product. Data concerning the company's operations last year appear below: Required: a. Compute the unit product cost under both absorption and variable costing. b. Prepare an income statement for the year using absorption costing. c. Prepare a contribution format income statement for the year using variable costing. d. Prepare a report reconciling the difference in net operating income between absorption and variable costing for the year.

A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations: What is the absorption costing unit product cost for the month?

Muhn Corporation has two divisions: Division K and Division L. Data from the most recent month appear below: Management has allocated common fixed expenses to the Divisions based on their sales. The break-even in sales dollars for Division K is closest to:

The total gross margin for the month under the absorption costing approach is:

Insider Corporation has two divisions, J and K. During March, the contribution margin in Division J was $30,000. The contribution margin ratio in Division K was 40%, its sales were $125,000, and its segment margin was $32,000. The common fixed expenses in the company were $40,000, and the company's net operating income was $18,000. The segment margin for Division J was:

A common fixed cost is a fixed cost that supports more than one business segment and is traceable in whole or in part to at least one of the business segments.

Sharron 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 variable costing unit product cost was:

A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations: What is the variable costing unit product cost for the month?

When using segmented income statements, the dollar sales for a segment to break even equals the common fixed expenses of the segment divided by the segment CM ratio.

Under variable costing, which of the following is not expensed in its entirety in the period in which it is incurred?