AC exam 2 ch.6 learnsmart
Blissful Breeze manufactures and sells ceiling fans. Each fan has a unit product cost of $112 and a unit selling price of $190. If Blissful Breeze produces 900 fans and sells 842 fans this month, the total cost of goods sold will be $_______.
94,304
Which of the following statements are correct regarding income statements prepared under variable and absorption costing?
both income statements include product and period costs reported net income on the statement often differ
A segment should discontinued when the segment:
cannot over its own costs has a contribution margin that cannot cover traceable fixed costs
If a segment is eliminated, ___ fixed costs that are not traced to the segment will not change.
common
a fixed cost that supports the operations of more than one segment, but is not traceable in whole or in part to any one segment is a(n) _____ fixed cost.
common
When a segment is eliminated, a:
common fixed cost will remain unchanged traceable fixed cost will disappear
Variable costing net income may be computed by multiplying the number of units sold by the _____ ____ per unit and subtracting total ____ expenses.
contribution margin and fixed
When preparing a contribution margin income statement:
cost of goods sold consists of only variable manufacturing costs variable and fixed costs are listed in separate sections of the statement
Using Variable costing and the contribution approach for internal decision making:
enables CVP analysis facilitates explaining changes in net income supports decision making
Using variable costing and the contribution approach for internal decision making:
enables CVP analysis supports decision making facilitates explaining changes in net income
The difference between reported net income on variable costing and absorption costing income statements is based on how:
fixed overhead is accounted for
A segment should be discontinued when the segment:
has a contribution margin that cannot cover traceable fixed costs cannot cover its own costs
When units produced exceed units sold, net income will generally be:
higher under absorption costing than under variable costing
Absorption costing can lead managers to mistakenly believe that fixed manufacturing overhead costs will _____ as the number of units produced increases.
increase in total
When using absorption costing and explaining changes in operating income, financial statement users need to be aware of changes in _____ levels.
inventory
If a segment is entirely eliminated, common fixed costs will:
not change
When allocating fixed manufacturing overhead cost to units under absorption costing, the total fixed overhead costs must be divided by the number of units _______.
produced
The segment margin is a valuable tool for assessing the long-run _____ of a segment.
profitability
A part of activity within an organization about which managers would like cost, revenue or profit data is called a(n) ________.
segment
From decision making point of view, _____ margin is most useful for major capacity decisions and _____ margin is most useful for short-term sales volume decisions.
segment contribution
A company's operations can be divided by product lines, geographical area, manufacturing plants, service centers or sales territories, which are known as ______.
segments
The segment margin represents the:
the margin available after a segment has covered all of its own costs
Absorption costing and variable costing net operating income will be equal when:
the number of units produced equals the number of units sold there is no beginning and no ending inventory
Fixed manufacturing overhead costs are included as part of Work in Process inventory under:
absorption costing only
Blink sells and manufactures frames for eyeglasses. The unit product cost for frame #47320 is $76.35. Last period, Blink produced 200 frames and sold 155 of them. Total cost of goods sold equal:
11,834.25
Place the following line items in order to construct a contribution format income statement
Sales Variable expenses Contribution margin Fixed expenses Net operating income
Product costs under absorption costing are:
Variable manufacturing overhead Direct labor Fixed manufacturing overhead Direct materials
Costs are categorized by function when using _____ costing and by behavior when using ____ costing.
absorption and variable
Fixed manufacturing overhead costs are expensed as units are sold as part of cost of goods sold under ______ costing, and expensed in full with period costs under _____ costing.
absorption and variable
When the number of units produced equals of units sold:
under both absorption costing and variable costing, all fixed overhead incurred flows to the income statement absorption costing net income is equal to variable costing net income
When using absorption costing, fixed manufacturing overhead cost per unit = Total fixed manufacturing overhead divided by:
units produced
The number of units produced does not affect net operating income when using _____ costing.
variable
Variable costing income statements separate _____ expenses from _____ expenses.
variable and fixed
For external reporting, income statements are generally prepared using _____ costing, and _____ costing is used for internal decision making purposes.
absorption and variable
Granny's Touch manufacturers and sells cookbooks. The company's variable cost of goods sold is $39,200 and variable selling and administrative expense is $6,200. Fixed manufacturing overhead is $19,700 and fixed selling and administrative expense is $9,290. An income statement prepared using variable costing shows $_______.
28,990
Citrus Scents produces body sprays. Each bottle has a unit product cost of $5.38. The company produced 1,490 bottles this month and sold 1,203 of those bottles. Total cost of goods sold was:
6,472.14
On an absorption costing income statement, selling and administrative expenses:
are reported as a single amount equal the amounts reported on a variable costing income statement
The segment margin equals the segment's contribution margin less the segment's ______ fixed costs.
traceable
Bart's Inc. operates retail stores in various cities. Segmented income statements are prepared for each store and for each product line in each store. The property tax for the store is a(n) ___ fixed cost for the store, and a(n) ___ fixed cost for each product line sold in the store.
traceable and common
Blissful Breeze manufacturers and sells ceiling fans. Variable selling and administrative expense is $11.50 per fan and fixed selling and administrative expense is $7,800 per month. If Blissful Breeze produces 900 fans and sells 842 fans this month, total selling and administrative expenses will be $
17,483
The unit product cost of a blender is $24. If 900 blenders are produced and 849 blenders are sold, the total cost of goods sold is $_______.
20,376
Absorption and variable costing net income are usually different due to the accounting for:
fixed manufacturing overhead
Frames, Inc. manufactures large wooden picture frames. Each frame requires $19 of direct materials and $40 of direct labor. Variable manufacturing overhead cost is $9 per frame produced, and variable selling and administrative expense is $13 per frame sold. The company produces 5,000 units each moth and total fixed manufacturing overhead cost per month is $15,000. The unit product cost of each frame using variable costing is ____.
68
Pearls, Pearls, Pearls! manufactures and sells jewelry. The total variable cost of goods sold this month is $72,490. Variable selling and administrative cost is $22 per unit sold. If 350 units are produced and 314 units are sold this month, the total variable cost reported on the income statement for the month is $____.
79,398
When there is no change in inventory, net operating income will be:
the same under both absorption costing and variable costing
Net operating income under absorption costing is generally ____ net operating income under variable costing in periods in which inventory increases.
higher than
An absorption costing income statement calculates:
Gross margin by deducting cost of goods sold from sales
