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Exam 6: Variable Costing and Segment Reporting: Tools for Management

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Question 101

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Aaron Corporation, which has only one product, has provided the following data concerning its most recent month of operations: The total gross margin for the month under the absorption costing approach is:

A) $12,000
B) $59,400
C) $63,000
D) $27,000

E) A) and D)
F) A) and C)

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Question 102

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Under variable costing, only variable production costs are treated as product costs.

A) True
B) False

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Question 103

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Tremble Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 49,000 units and sold 45,000 units. The company's only product is sold for $233 per unit.Assume that the company uses an absorption costing system that assigns $11 of direct labor cost and $75 of fixed manufacturing overhead to each unit that is produced. The unit product cost under this costing system is:

Tremble Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 68,000 units and sold 65,600 units. The company's only product is sold for $278 per unit.Assume that the company uses an absorption costing system that assigns $17 of direct labor cost and $60 of fixed manufacturing overhead to each unit that is produced. The unit product cost under this costing system is:

Nelter Corporation, which has only one product, has provided the following data concerning its most recent month of operations: The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month.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.

In its first year of operations, Bronfren Corporation produced 800,000 sets and sold 780,000 sets of artificial tan lines. What would have happened to net operating income in this first year under the following costing methods if Bronfren had produced 20,000 fewer sets? (Assume that Bronfren has both variable and fixed production costs.)

Dallavalle Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 32,000 units and sold 31,000 units. The company's only product is sold for $238 per unit.The unit product cost under super-variable costing is:

Fernstrom Corporation has two divisions: East and West. Data from the most recent month appear below: The company's common fixed expenses total $52,140. If the company operates at exactly the break-even sales of the East Division and West Division, what would be the company's overall net operating income?

Janos Corporation, which has only one product, has provided the following data concerning its most recent month of operations: The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month.What is the net operating income for the month under variable costing?

Last year, Tinklenberg Corporation's variable costing net operating income was $52,400 and its inventory decreased by 1,400 units. Fixed manufacturing overhead cost was $8 per unit for both units in beginning and in ending inventory. What was the absorption costing net operating income last year?

Aaron Corporation, which has only one product, has provided the following data concerning its most recent month of operations: What is the unit product cost for the month under absorption costing?

Davitt Corporation produces a single product and has the following cost structure: Required:Compute the unit product cost under variable costing.

Murphy Incorporated, 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:a. Compute the unit product cost under absorption costing.b. Compute the unit product cost under variable costing.

Jemmott Corporation has two divisions: Western Division and Eastern Division. The following report is for the most recent operating period: The common fixed expenses have been allocated to the divisions on the basis of sales.The Western Division's break-even sales is closest to:

Clemeson Corporation, which has only one product, has provided the following data concerning its most recent month of operations: The total gross margin for the month under the absorption costing approach is:

Neelon Corporation has two divisions: Southern Division and Northern Division. The following data are for the most recent operating period: The common fixed expenses have been allocated to the divisions on the basis of sales.The company's overall break-even sales is closest to:

When using data from a segmented income statement, the dollar sales for a segment to break even is equal to:

Corbett Corporation manufactures a single product. Last year, variable costing net operating income was $72,000. The fixed manufacturing overhead costs deferred in inventory under absorption costing amounted to $29,000.Required:Determine the absorption costing net operating income last year.

Variable costing is more compatible with cost-volume-profit analysis than is absorption costing.

Data for September concerning Greenberger Corporation's two major business segments--Fibers and Feedstocks--appear below: Common fixed expenses totaled $344,000 and were allocated as follows: $175,000 to the Fibers business segment and $169,000 to the Feedstocks business segment.Required: Prepare a segmented income statement in the contribution format for the company. Omit percentages; show only dollar amounts.