ACC Exam 2

Traceable fixed cost to the plant and a common fixed cost

Arbot Co. manufactures appliances at three manufacturing facilities in the United States. Each location has a plant manager who oversees the manufacturing process for that location. Segmented income statements are prepared for each plant and for each product manufactured in the plant. The salary of each plant manager is a Blank______ for the individual product lines made in the plant.

(Dollar dales for company to break even) = (traceable fixed expenses + common fixed expenses)/ Overall CM ratio

A company has two segments with total sales of $50,000 and total variable costs of $343,750. Traceable fixed expenses are $50,000 and common fixed expense are $80,000. The break even in dollars for the company as a whole equals $______

Has an overall net operating loss of $10,000

A company with three segments has $10,000 in common fixed expenses. All three segments are at the break-even point. As a result, the company______

True

A cost that can be traced directly to a specific segment should be charged directly to that segment and not allocated to other segments. T/F

is incurred because of the existence of the segment

A traceable fixed cost_______

traceable fixed cost for the store and a common fixed cost for

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 of a store is a ______ the product lines.

absorption

Because nonmanufacturing costs are not included as costs of a product, the use of ______ costing can lead to the omission of segment costs.

1. arbitrarily allocating common fixed costs 2. omitting costs that should be included 3. inappropriately assigning traceable fixed costs

Common mistakes made by the companies when assigning costs to segments include_____

should not be allocated to all segments

Costs that can be traced directly to a segment ______

(traceable fixed expenses + common fixed expenses)/overall CM ratio

Dollar break-even for a company is calculated as _____

70,000/.40= 175,000

JPL Company has two segments - Retail and Commercial. The Retail segment has a contribution margin ratio of 40% and traceable fixed expenses of $70,000. Commercial has traceable fixed expenses of $50,000 and a contribution margin ratio of 55%. The company also has $30,000 of common fixed expenses. The break-even point in dollar sales for the Retail segment equals Blank______.

Increased online sales contribution margin [100,000 x 10% x (60,000/100,000) is 6000+5000 saved from stopping catalog sales =11,000

SPS Products has two divisions—Catalog Sales and Online Sales. For the last quarter the Catalog Sales segment margin was ($5,000). Online sales were $100,000. Online Sales contribution margin was $60,000, and its segment margin was $40,000. If Catalog Sales are discontinued, it is estimated that online sales will increase by 10%. Discontinuing Catalog Sales should increase company profits by Blank______.

only traceable

Segment break-even calculations include ______fixed expenses.

Higher than

The company-wide break-even sales will always be _____ the sum of the segment break-even sales.

1. The segment's contribution margin 2. The segment's traceable fixed costs

When calculating the profit impact of discontinuing a segment, consider ________

C. Computing contribution margin instead of gross margin

Which of the following is NOT a common mistake made in preparing segmented income statements? A. Omitting costs that should be included. B. Using inappropriate allocations bases. C. Computing contribution margin instead of gross margin. D. Arbitrarily dividing common costs among segments.

1. under-costing of segments 2. omission of upstream and downstream costs

using absorption costing for segmented income statements can lead to_____