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

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Question 31

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Over an extended period of time in which the final ending inventories are zero,the accumulated net operating income figures reported under absorption costing will be:

A) greater than those reported under variable costing.
B) less than those reported under variable costing.
C) the same as those reported under variable costing.
D) higher or lower since no generalization can be made.

E) None of the above
F) A) and B)

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Question 32

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Pellman 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 unit product cost under absorption costing was:

A) $91
B) $72
C) $25
D) $32

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

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Question 33

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Absorption costing is more compatible with cost-volume-profit analysis than is variable costing.

Jarvinen Company, 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?

Nesman Company,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.

Last year,Holroyd Corporation's variable costing net operating income was $95,000.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.Show your work!

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?

Packer Company,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.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. )

Sproles Inc.manufactures a variety of products.Variable costing net operating income was $90,500 last year and its inventory decreased by 3,500 units.Fixed manufacturing overhead cost was $6 per unit.What was the absorption costing net operating income last year?

Fahey Company manufactures a single product that it sells for $25 per unit. The company has the following cost structure: There were no units in beginning inventory. During the year, 18,000 units were produced and 15,000 units were sold. -The company's net operating income for the year under variable costing is:

Craft Company produces a single product.Last year,the company had a net operating income of $80,000 using absorption costing and $74,500 using variable costing.The fixed manufacturing overhead cost was $5 per unit.There were no beginning inventories.If 21,500 units were produced last year,then sales last year were:

Cockriel 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:

Ring, Incorporated's income statement for the most recent month is given below. For each of the following questions, refer back to the original data. -If Store Q sales increase by $30,000 with no change in fixed expenses,the overall company net operating income should:

Eagle Corporation manufactures a picnic table. Shown below is Eagle's cost structure: In its first year of operations, Eagle produced and sold 10,000 tables. The tables sold for $120 each. -How would Eagle's variable costing net operating income have been affected in its first year if only 9,000 tables were sold instead of 10,000?

Segment margin is sales minus:

Olds 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 absorption costing unit product cost was:

Abe 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?

Data for May concerning Dorow Corporation's two major business segments-Fibers and Feedstocks-appear below: Common fixed expenses totaled $345,000 and were allocated as follows: $186,000 to the Fibers business segment and $159,000 to the Feedstocks business segment. Required: Prepare a segmented income statement in the contribution format for the company.Omit percentages;show only dollar amounts.

Krug Corporation manufactures a variety of products. The following data pertain to the company's operations over the last two years: -What was the absorption costing net operating income this year?

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: