Question 1

Under absorption costing, product costs include:

Accepted Answer

A) Option A 
B) Option B 
C) Option C 
D) Option D

Question 2

Ivancevic 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 Ivancevic Inc., which produces a single product,...

Question 3

Qabar Corporation, which has only one product, has provided the following data concerning its most recent month of operations:  Required:
a. What is the unit product cost for the month under variable costing?
b. Prepare a contribution format income statement for the month using variable costing.
c. Without preparing an income statement, determine the absorption costing net operating income for the month. (Hint: Use the reconciliation method.)

Accepted Answer

The answer of Qabar Corporation, which has only one product,...

Question 4

Mahugh Corporation, which has only one product, has provided the following data concerning its most recent month of operations:  Required:
a. What is the unit product cost for the month under variable costing?
b. What is the unit product cost for the month under absorption costing?
c. Prepare a contribution format income statement for the month using variable costing.
d. Prepare an income statement for the month using absorption costing.
e. Reconcile the variable costing and absorption costing net operating incomes for the month.

Accepted Answer

The answer of Mahugh Corporation, which has only one product,...

Question 5

Under absorption costing, what is the total cost that would be assigned to Carlos' finished goods inventory at the end of the first year of operations?

Accepted Answer

A) $15,000 
B) $42,125 
C) $44,000 
D) $47,125

Question 6

Pratt Corporation has two major business segments-Apparel and Accessories. Data concerning those segments for October appear below:  Common fixed expenses totaled $153,000 and were allocated as follows: $73,000 to the Apparel business segment and $80,000 to the Accessories 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 Pratt Corporation has two major business segments-Apparel...

Question 7

Common fixed expenses should be allocated to business segments when performing break-even calculations and making decisions.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A) $66 per unit 
B) $93 
C) $87 
D) $60

Question 9

The Gold Division's break-even sales is closest to:

Accepted Answer

A) $276,812 
B) $301,391 
C) $383,825 
D) $201,449

Question 10

A properly constructed segmented income statement in a contribution format would show that the segment margin of the East business segment is:

Accepted Answer

A) $125,000 
B) $66,000 
C) -$28,000 
D) -$57,000

Question 11

The net operating income for the company as a whole for June was:

Accepted Answer

A) $45,000 
B) $105,000 
C) $150,000 
D) $570,000

Question 12

When sales are constant, but the number of units produced fluctuates, net operating income determined by the absorption costing method will:

Accepted Answer

A) tend to fluctuate in the same direction as fluctuations in the number of units produced. 
B) tend to remain constant. 
C) tend to fluctuate in the opposite direction as fluctuations in the number of units produced. 
D) fluctuate without any relation to the number of units produced.

Question 13

Gough Corporation has two divisions: Domestic and Foreign. Data from the most recent month appear below:  The break-even in sales dollars for the company as a whole is closest to:

Accepted Answer

A) $609,794 
B) $502,579 
C) $107,216 
D) $436,424

Question 14

The Foreign Division's break-even sales is closest to:

Accepted Answer

A) $160,294 
B) $275,794 
C) $466,116 
D) $214,029

Question 15

The company's net operating income for the year under variable costing is:

Accepted Answer

A) $110,000 
B) $149,000 
C) $161,000 
D) $170,000

Question 16

A properly constructed segmented income statement in a contribution format would show that the net operating income of the company as a whole is:

Accepted Answer

A) -$109,000 
B) $203,000 
C) $293,000 
D) $47,000

Question 17

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

Accepted Answer

A) $(17,000) 
B) $16,600 
C) $6,000 
D) $10,600

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

What is the total period cost for the month under variable costing?

Accepted Answer

A) $230,100 
B) $194,100 
C) $170,100 
D) $60,000

Question 20

The contribution margin in dollars for Product B for June was:

Accepted Answer

A) $45,000 
B) $111,000 
C) $180,000 
D) $300,000

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