Question 1

The common fixed expense for Gasson Company for the month of June was:

Accepted Answer

A) $350,000 
B) $280,000 
C) $70,000 
D) $20,000

Question 2

Dull Corporation has been producing and selling electric razors for the past ten years. Shown below are the actual net operating incomes for the last three years of operations at Dull:  Dull Corporation's cost structure and selling price has not changed during its ten years of operations. Based on the information presented above, which of the following statements are true?

Accepted Answer

A) Dull Corporation operated above the breakeven point in each of the three years presented. 
B) For the three years presented in total, Dull Corporation sold more units than it produced. 
C) In Year 10, Dull Corporation produced fewer units than it sold. 
D) In Year 9, Dull Corporation produced more units than it sold.

Question 3

The marketing department believes that a promotional campaign at Store P costing $5,000 will increase sales by $15,000. If the campaign is adopted, overall company net operating income should:

Accepted Answer

A) decrease by $800 
B) decrease by $5,800 
C) increase by $5,800 
D) increase by $10,000

Question 4

A company produces a single product. Last year, fixed manufacturing overhead was $30,000, variable production costs were $48,000, fixed selling and administration costs were $20,000, and variable selling administrative expenses were $9,600. There was no beginning inventory. During the year, 3,000 units were produced and 2,400 units were sold at a price of $40 per unit. Under variable costing, net operating income would be:

Accepted Answer

A) a profit of $6,000. 
B) a profit of $4,000. 
C) a loss of $2,000. 
D) a loss of $4,400.

Question 5

In an income statement segmented by product line, a fixed expense that cannot be allocated among product lines on a cause-and-effect basis should be:

Accepted Answer

A) classified as a traceable fixed expense and not allocated. 
B) allocated to the product lines on the basis of sales dollars. 
C) allocated to the product lines on the basis of segment margin. 
D) classified as a common fixed expense and not allocated.

Question 6

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

Accepted Answer

A) $10,200 
B) $(19,000) 
C) $8,800 
D) $1,400

Question 7

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?

Accepted Answer

A) $103 
B) $99 
C) $94 
D) $90

Question 8

Under absorption costing, for the month ended August 31, the company would report a:

Accepted Answer

A) $20,000 profit 
B) $5,000 loss 
C) $35,000 profit 
D) $5,000 profit

Question 9

If the sales in Division L increase by 30% while common fixed expenses in the company decrease by $10,000, the segment margin for Division L should:

Accepted Answer

A) increase by $32,400 
B) increase by $10,800 
C) decrease by $22,400 
D) decrease by $65,600

Question 10

Stephen Company has the following data for its three stores last year:  Given the above data, the total company sales were:

Accepted Answer

A) $1,250,000 
B) $1,375,000 
C) $1,450,000 
D) $800,000

Question 11

Gangwer Corporation produces a single product and has the following cost structure:  The absorption costing unit product cost is:

Accepted Answer

A) $95 
B) $119 
C) $61 
D) $56

Question 12

The unit product cost under variable costing was:

Accepted Answer

A) $3.20 
B) $3.81 
C) $4.12 
D) $3.51

Question 13

Variable manufacturing overhead costs are treated as period costs under both absorption and variable costing.

Accepted Answer

A) True 
 B)False

Question 14

Mossor Corporation has two major business segments-Retail and Wholesale. In December, the Retail business segment had sales revenues of $510,000, variable expenses of $296,000, and traceable fixed expenses of $61,000. During the same month, the Wholesale business segment had sales revenues of $510,000, variable expenses of $240,000, and traceable fixed expenses of $82,000. Common fixed expenses totaled $191,000 and were allocated as follows: $113,000 to the Retail business segment and $78,000 to the Wholesale business segment.
Required:
Prepare a segmented income statement in the contribution format for the company. Omit percentages; show only dollar amounts.

Accepted Answer

The answer of Mossor Corporation has two major business segments-Retail...

Question 15

Bertone Inc., which produces a single product, has provided the following data for its most recent month of operation:  The company had no beginning or ending inventories.
Required:
Compute the unit product cost under variable costing. Show your work!

Accepted Answer

The answer of Bertone Inc., which produces a single product,...

Question 16

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:

Accepted Answer

A) $42,000 
B) $14,700 
C) $69,000 
D) $79,800

Question 17

When reconciling variable costing and absorption costing net operating income, fixed manufacturing overhead costs deferred in inventory under absorption costing should be added to variable costing net operating income to arrive at the absorption costing net operating income.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A) $58,300 
B) $37,100 
C) $259,900 
D) $201,600

Question 19

What was the absorption costing net operating income last year?

Accepted Answer

A) $56,000 
B) $37,000 
C) $57,000 
D) $75,000

Question 20

Last year, Teneyck Corporation's variable costing net operating income was $63,500 and ending inventory decreased by 200 units. Fixed manufacturing overhead cost per unit was $5.
Required:
Determine the absorption costing net operating income for last year. Show your work!

Accepted Answer

The answer of Last year, Teneyck Corporation's variable costing net...

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

The common fixed expense for Gasson Company for the month of June was:

The marketing department believes that a promotional campaign at Store P costing $5,000 will increase sales by $15,000. If the campaign is adopted, overall company net operating income should:

In an income statement segmented by product line, a fixed expense that cannot be allocated among product lines on a cause-and-effect basis should be:

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

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?

Under absorption costing, for the month ended August 31, the company would report a:

If the sales in Division L increase by 30% while common fixed expenses in the company decrease by $10,000, the segment margin for Division L should:

Stephen Company has the following data for its three stores last year: Given the above data, the total company sales were:

Gangwer Corporation produces a single product and has the following cost structure: The absorption costing unit product cost is:

The unit product cost under variable costing was:

Variable manufacturing overhead costs are treated as period costs under both absorption and variable costing.

Bertone Inc., which produces a single product, has provided the following data for its most recent month of operation: The company had no beginning or ending inventories. Required: Compute the unit product cost under variable costing. Show your work!

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:

When reconciling variable costing and absorption costing net operating income, fixed manufacturing overhead costs deferred in inventory under absorption costing should be added to variable costing net operating income to arrive at the absorption costing net operating income.

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

What was the absorption costing net operating income last year?

Last year, Teneyck Corporation's variable costing net operating income was $63,500 and ending inventory decreased by 200 units. Fixed manufacturing overhead cost per unit was $5. Required: Determine the absorption costing net operating income for last year. Show your work!