Question 1

Favini Company, which has only one product, has provided the following data concerning its most recent month of operations: 
-What is the net operating income for the month under variable costing?

Accepted Answer

Under variable costing, net operating income is calculated by subtracting variable costs and fixed costs from sales revenue. The correct answer is $3,700.

Question 2

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?

Accepted Answer

The net operating income is calculated by subtracting total expenses from total sales. For Alpha: $820,000 - $369,000 - $347,300 = $103,700. For Delta: $460,000 - $294,400 - $134,100 = $31,500. Total divisional income: $103,700 + $31,500 = $135,200. Subtract common fixed expenses: $135,200 - $97,300 = $37,900.

Question 3

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

Accepted Answer

Under absorption costing, the cost of goods sold includes all manufacturing costs (direct materials, direct labor, and manufacturing overhead) and the fixed manufacturing overhead is absorbed into the cost of goods sold. 
Cost of goods sold = Direct materials + Direct labor + Manufacturing overhead + Fixed manufacturing overhead absorption 
= $120,000 + $80,000 + $100,000 + ($345,600 - $300,000) 
= $206,400 + $45,600 
= $252,000 
Therefore, the correct answer is B, $345,600.

Question 4

During April,Division D of Carney Company had a segment margin ratio of 15%,a variable expense ratio of 60% of sales,and traceable fixed expenses of $15,000.Division D's sales were closest to:

Accepted Answer

Segment margin = 0.15 F1F1F1S1F1F1F10 Segment sales
Segment variable expenses = 0.60 F1F1F1S1F1F1F10 Segment sales
Segment traceable fixed expenses = $15,000
Segment margin = Segment sales - Segment variable expenses - Segment traceable fixed expenses
0.15 F1F1F1S1F1F1F10 Segment sales = Segment sales - 0.60 F1F1F1S1F1F1F10 Segment sales - $15,000
0.25 F1F1F1S1F1F1F10 Segment sales = $15,000
Segment sales = $15,000 F1F1F1S1F1F1F10 0.25 = $60,000

Question 5

Colasuonno Corporation has two divisions: the West Division and the East Division.The corporation's net operating income is $88,800.The West Division's divisional segment margin is $39,500 and the East Division's divisional segment margin is $166,900.What is the amount of the common fixed expense not traceable to the individual divisions?

Accepted Answer

Total segment margin = $39,500 + $166,900 = $206,400
Total net operating income = Total segment margin - Common fixed expenses
$88,800 = $206,400 - Common fixed expenses
Common fixed expenses = $206,400 - $88,800 = $117,600

Question 6

Under variable costing,the unit product cost would be:

Accepted Answer

Under variable costing,the unit product cost is the variable production cost of $43 per unit.

Question 7

The ARB Company has two divisions: Electronics and DVD/Video Sales.Electronics has traceable fixed expenses of $146,280 and the DVD/Video Sales has traceable fixed expenses of $81,765.If ARB Company has a total of $322,490 in fixed expenses,what are its common fixed expenses?

Accepted Answer

Common fixed expenses = Total fixed expenses - Traceable fixed expenses
= $322,490 - ($146,280 + $81,765)=$94,445

Question 8

Carr Company produces a single product. During the past year, Carr manufactured 25,000 units and sold 20,000 units. Production costs for the year were as follows:
-The net operating income for the year under variable costing would be:

Accepted Answer

Change in units in inventory = Units produced - Units sold
= 25,000 units - 20,000 units = 5,000 unit increase
Fixed manufacturing overhead per unit = Fixed manufacturing overhead F1F1F1S1F1F1F10 Units produced
= $250,000 F1F1F1S1F1F1F10 25,000 units = $10.00 per unit
Since the units produced exceeds the units sold,fixed manufacturing overhead costs will be deferred in inventory and absorption costing net operating income will exceed variable costing net operating income.
Manufacturing overhead deferred in inventory = Fixed manufacturing overhead per unit F1F1F1S1F1F1F10 Increase in units in inventory = $10.00 per unit F1F1F1S1F1F1F10 5,000 units = $50,000

Question 9

Favini Company, 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 variable costing?

Accepted Answer

Under variable costing, the unit product cost includes only variable manufacturing costs. The given options suggest that $91 is the correct unit product cost under variable costing.

Question 10

Carr Company produces a single product. During the past year, Carr manufactured 25,000 units and sold 20,000 units. Production costs for the year were as follows:
-The contribution margin per unit would be:

Accepted Answer

Variable expenses per unit:
 11eaa48f_7ba4_5ffe_9e4a_c93ea954fea8_TB2485_00 Selling price per unit = $850,000 F1F1F1S1F1F1F10 20,000 units = $42.50 per unit
Unit CM = Selling price per unit - Variable expenses per unit
= $42.50 per unit - $25.90 per unit = $16.60 per unit

Question 11

Phillipson Corporation has two divisions: the IEB Division and the PIH Division.The corporation's net operating income is $83,900.The IEB Division's divisional segment margin is $149,700 and the PIH Division's divisional segment margin is $60,100.What is the amount of the common fixed expense not traceable to the individual divisions?

Accepted Answer

Net operating income = Segment margin - Common fixed expenses
$83,900 = ($149,700 +$60,100)- Common fixed expenses
$83,900 = $209,800 - Common fixed expenses
Common fixed expenses = $209,800 - $83,900 = $125,900

Question 12

Favini Company, 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?

Accepted Answer

Under absorption costing, the unit product cost includes both direct and indirect manufacturing costs. Total manufacturing costs for the month were $236,000 ($42,000 + $52,000 + $102,000 + $40,000) and total units produced were 2,000. Therefore, the unit product cost is $118 per unit ($236,000 ÷ 2,000 units).

Question 13

Gore Corporation has two divisions: the Business Products Division and the Export Products Division.The Business Products Division's divisional segment margin is $55,700 and the Export Products Division's divisional segment margin is $70,600.The total amount of common fixed expenses not traceable to the individual divisions is $107,400.What is the company's net operating income?

Accepted Answer

Total segment margin = $55,700 + $70,600 = $126,300
Total net operating income = Total segment margin - Common fixed expenses
= $126,300 - $107,400 = $18,900

Question 14

Favini Company, which has only one product, has provided the following data concerning its most recent month of operations: 
-What is the net operating income for the month under absorption costing?

Accepted Answer

Under absorption costing, fixed manufacturing overhead is included in the cost of goods sold, which can result in a higher net operating income compared to variable costing. $11,800 is the correct net operating income under absorption costing.

Question 15

Hansen Company produces a single product.During the last year,Hansen had net operating income under absorption costing that was $5,500 lower than its income under variable costing.The company sold 9,000 units during the year,and its variable costs were $10 per unit,of which $6 was variable selling expense.If fixed production cost is $5 per unit under absorption costing every year,then how many units did the company produce during the year?

Accepted Answer

Since net operating income under absorption costing was $5,500 lower than under variable costing,inventories must have decrease
Fixed manufacturing overhead costs released from inventory under absorption costing = Fixed manufacturing overhead per unit F1F1F1S1F1F1F10 Reduction in the units in inventory
$5,500 = $5 per unit F1F1F1S1F1F1F10 Reduction in the units in inventory
Reduction in the units in inventory = $5,500 F1F1F1S1F1F1F10 $5 per unit = 1,100 units
Units in beginning inventory + Units produced = Units sold + Units in ending inventory
Units in beginning inventory - Units in ending inventory = Units sold - Units produced
Reduction in the units in inventory = Units sold - Units produced
1,100 units = 9,000 units - Units produced
Units produced = 9,000 units - 1,100 units = 7,900 units

Question 16

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:

Accepted Answer

Since the variable costing operating net income was $9,600 higher under variable costing than under absorption costing,fixed manufacturing overhead costs must have been released from inventory under absorption costing.In other words,the ending inventory must have been lower than the beginning inventory.Under the LIFO inventory flow assumption,all of the units in ending inventory were also in beginning inventory.Therefore,the reduction in inventory must have been 1,200 units (= $9,600 F1F1F1S1F1F1F10 $8 per unit).
Units in ending inventory = Units in beginning inventory - Reduction in units in inventory
20,000 units = Units in beginning inventory - 1,200 units
Units in beginning inventory = 20,000 units + 1,200 units = 21,200 units

Question 17

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

Accepted Answer

Fixed manufacturing overhead per unit = Fixed manufacturing overhead F1F1F1S1F1F1F10 Units produced
= $145,000 F1F1F1S1F1F1F10 5,000 units = $29 per unit
Change in units in inventory = Units produced - Units sold = 5,000 units - 4,800 units = 200 units
Since inventories increased by 200 units,fixed manufacturing overhead is deferred in inventories and absorption costing net operating income will be greater than variable costing net operating income.
Manufacturing overhead deferred in inventory = Fixed manufacturing overhead per unit F1F1F1S1F1F1F10 Increase in units in inventory = $29 per unit F1F1F1S1F1F1F10 200 unit increase = $5,800

Question 18

Carr Company produces a single product. During the past year, Carr manufactured 25,000 units and sold 20,000 units. Production costs for the year were as follows:
-Under absorption costing,the ending inventory for the year would be valued at:

Accepted Answer

The answer of Carr Company produces a single product. During...

Question 19

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

Accepted Answer

The answer of Stephen Company has the following data for...

Question 20

More Company has two divisions,L and M.During July,the contribution margin in Division L was $60,000.The contribution margin ratio in Division M was 40% and its sales were $250,000.Division M's segment margin was $60,000.The common fixed expenses were $50,000 and the company net operating income was $20,000.The segment margin for Division L was:

Accepted Answer

The answer of More Company has two divisions,L and M.During...

Quiz 5: Variable Costing and Segment Reporting: Tools for Management

Favini Company, which has only one product, has provided the following data concerning its most recent month of operations: -What is the net operating income for the month under variable costing?

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

During April,Division D of Carney Company had a segment margin ratio of 15%,a variable expense ratio of 60% of sales,and traceable fixed expenses of $15,000.Division D's sales were closest to:

Under variable costing,the unit product cost would be:

The ARB Company has two divisions: Electronics and DVD/Video Sales.Electronics has traceable fixed expenses of $146,280 and the DVD/Video Sales has traceable fixed expenses of $81,765.If ARB Company has a total of $322,490 in fixed expenses,what are its common fixed expenses?

Carr Company produces a single product. During the past year, Carr manufactured 25,000 units and sold 20,000 units. Production costs for the year were as follows: -The net operating income for the year under variable costing would be:

Favini Company, 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 variable costing?

Carr Company produces a single product. During the past year, Carr manufactured 25,000 units and sold 20,000 units. Production costs for the year were as follows: -The contribution margin per unit would be:

Favini Company, 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?

Favini Company, which has only one product, has provided the following data concerning its most recent month of operations: -What is the net operating income for the month under absorption costing?

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

Carr Company produces a single product. During the past year, Carr manufactured 25,000 units and sold 20,000 units. Production costs for the year were as follows: -Under absorption costing,the ending inventory for the year would be valued at:

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