ACCT 6521 Exam 2
Sharron 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:
"A. $111 per unit (DM + DL + Var. Manu Overhead ) = Variable unit product cost 91+13+7 = 111"
"Crystal Corporation produces a single product. The company's variable costing income statement for the month of May appears below: The company produced 80,000 units in May and the beginning inventory consisted of 25,000 units. Variable production costs per unit and total fixed costs have remained constant over the past several months. The value of the company's inventory on May 31 under absorption costing would be: "
"A. $120,000 Units sold = $900,000 ÷ $10 per unit = 90,000 units Units in beginning inventory + Units produced = Units sold + Units in ending inventory 25,000 units + 80,000 units = 90,000 units + Units in ending inventory Units in ending inventory = 25,000 units + 80,000 units - 90,000 units = 15,000 units "
Carrejo Corporation has two divisions: Division M and Division N. Data from the most recent month appear below: Management has allocated common fixed expenses to the Divisions based on their sales. The break-even in sales dollars for Division N is closest to
"A. $172,131 Division N: Segment CM ratio = Segment contribution margin ÷ Segment sales = $136,030 ÷ $223,000 = 0.61 Dollar sales for a segment to break even = Segment traceable fixed expenses ÷ Segment CM ratio = $105,000 ÷ 0.61 = $172,131 "
Insider Corporation has two divisions, J and K. During March, the contribution margin in Division J was $30,000. The contribution margin ratio in Division K was 40%, its sales were $125,000, and its segment margin was $32,000. The common fixed expenses in the company were $40,000, and the company's net operating income was $18,000. The segment margin for Division J was:
"A. $26,000 Net operating income = Total segment margin - Common fixed expenses $18,000 = Total segment margin - $40,000 Total segment margin = $18,000 + $40,000 = $58,000 Total segment margin = Division J segment margin + Division K segment margin $58,000 = Division J segment margin + $32,000 Division J segment margin = $58,000 - $32,000 = $26,000 "
A company produces a single product. Variable production costs are $12 per unit and variable selling and administrative expenses are $3 per unit. Fixed manufacturing overhead totals $36,000 and fixed selling and administration expenses total $40,000. Assuming a beginning inventory of zero, production of 4,000 units and sales of 3,600 units, the dollar value of the ending inventory under variable costing would be:
"A. $4,800 Units in ending inventory = Units in beginning inventory + Units produced - Units sold = 0 units + 4,000 units - 3,600 units = 400 units Value of ending inventory under variable costing = Unit in ending inventory × Variable production cost = 400 units × $12 per unit = $4,800 "
"Gough Corporation has two divisions: Domestic and Foreign. Data from the most recent month appear below: The break-even in sales dollars for the company as a whole is closest to: "
"A. $609,794 Overall company: CM ratio = Contribution margin ÷ Sales = $447,470 ÷ $668,000 = 0.67 Fixed expenses = Traceable fixed expenses + Common fixed expenses = $335,000 + $73,480 = $408,480 Dollar sales to break even = Fixed expenses ÷ CM ratio = $408,480 ÷ 0.67 = $609,794 (using unrounded decimals) "
"Peterson Corporation produces a single product. Data from the company's records for last year follow: Under variable costing the value of the ending finished goods inventory would be: "
"A. $90,000 Units in ending inventory = Units in beginning inventory + Units produced - Units sold = 0 units + 70,000 units - 60,000 units = 10,000 units Variable manufacturing cost per unit = $630,000 ÷ 70,000 units = $9 per unit Variable costing ending finished goods inventory = 10,000 units × $9 per unit = $90,000 "
A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations: What is the absorption costing unit product cost for the month?
"A. $96 per unit DM + DL + Var. Man Overhead + Fixed Man OH cost = Absorption costing unit product cost 29+49+5+13 = 96"
"Crystal Corporation produces a single product. The company's variable costing income statement for the month of May appears below: The company produced 80,000 units in May and the beginning inventory consisted of 25,000 units. Variable production costs per unit and total fixed costs have remained constant over the past several months. Under absorption costing, for May the company would report a: "
"B. $0 profit Units sold = $900,000 ÷ $10 per unit = 90,000 units Units in beginning inventory + Units produced = Units sold + Units in ending inventory 25,000 units + 80,000 units = 90,000 units + Units in ending inventory Units in ending inventory = 25,000 units + 80,000 units - 90,000 units = 15,000 units Manufacturing overhead deferred in (released from) inventory = Fixed manufacturing overhead in ending inventory - Fixed manufacturing overhead in beginning inventory = ($3 per unit × Units in ending inventory) - ($3 per unit × Units in beginning inventory) = $3 per unit × (Units in ending inventory - Units in beginning inventory) = $3 per unit × (15,000 units - 25,000 units) = -$30,000 "
Yuvil Corporation produces a single product. At the end of the company's first year of operations, 1,000 units of inventory remained on hand. Its variable manufacturing overhead cost is $45 per unit and its fixed manufacturing overhead cost is $10 per unit. Yuvil's absorption costing net operating income would be higher than its variable costing net operating income by:
"B. $10,000 Because beginning inventory was zero and 1,000 units were in ending inventory, fixed manufacturing overhead was deferred inventory. Manufacturing overhead deferred in (released from) inventory = Fixed manufacturing overhead in ending inventory - Fixed manufacturing overhead in beginning inventory = ($10 per unit × 1,000 units) - $0 = $10,000 Because $10,000 of manufacturing overhead was deferred in inventory, absorption costing net operating income was $10,000 higher than variable costing net operating income "
Brummitt Corporation has two divisions: the BAJ Division and the CBB Division. The corporation's net operating income is $10,700. The BAJ Division's divisional segment margin is $76,100 and the CBB Division's divisional segment margin is $42,300. What is the amount of the common fixed expense not traceable to the individual divisions?
"B. $107,700 Net operating income = Segment margin - Common fixed expenses $10,700 = ($76,100 +$42,300) - Common fixed expenses $10,700 = $118,400 - Common fixed expenses Common fixed expenses = $118,400 - $10,700 = $107,700 "
Sorto Corporation has two divisions: the East Division and the West Division. The corporation's net operating income is $93,200. The East Division's divisional segment margin is $223,200 and the West Division's divisional segment margin is $15,900. What is the amount of the common fixed expense not traceable to the individual divisions?
"B. $145,900 Total segment margin = $223,200 + $15,900 = $239,100 Total net operating income = Total segment margin - Common fixed expenses $93,200 = $239,100 - Common fixed expenses Common fixed expenses = $239,100 - $93,200 = $145,900 "
"Warburton Corporation has two divisions: Alpha and Beta. Data from the most recent month appear below: The company's common fixed expenses total $85,690. The break-even in sales dollars for Alpha Division is closest to: "
"B. $162,338 Alpha Division: Segment contribution margin = Segment sales - Segment variable expenses = $222,000 - $51,060 = $170,940 Segment CM ratio = Segment contribution margin ÷ Segment sales = $170,940 ÷ $222,000 = 0.77 Dollar sales for a segment to break even = Segment traceable fixed expenses ÷ Segment CM ratio = $66,410 ÷ 0.77 = $162,338 "
"Peterson Corporation produces a single product. Data from the company's records for last year follow: Under variable costing, net operating income would be: "
"B. $307,000 Variable manufacturing cost per unit = $630,000 ÷ 70,000 units = $9 per unit Variable costing income statement "
Last year, Walters Corporation's variable costing net operating income was $60,800 and its inventory decreased by 200 units. Fixed manufacturing overhead cost was $3 per unit for both units in beginning and in ending inventory. What was the absorption costing net operating income last year?
"B. $60,200 Manufacturing overhead deferred in (released from) inventory = Fixed manufacturing overhead in ending inventory - Fixed manufacturing overhead in beginning inventory = ($3 per unit × Units in ending inventory) - ($3 per unit × Units in beginning inventory) = $3 per unit × (Units in ending inventory - Units in beginning inventory) = $3 per unit × (-200) = -$600 "
"Crow Corporation produces a single product and has the following cost structure: The variable costing unit product cost is: "
"B. $95 per unit (DM + DL + Var. Manu Overhead ) = Variable unit product cost 28+61+6 = 95"
Last year, Rassel Corporation's variable costing net operating income was $63,200. Fixed manufacturing overhead costs deferred in inventory under absorption costing amounted to $31,900. What was the absorption costing net operating income last year?
"B. $95,100 63,200 + 31900 = 95100"
Craft Corporation 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:
"B. 20,400 units Since absorption costing net operating income was greater than its variable costing net operating income by $5,500, it must have deferred $5,500 of fixed manufacturing overhead costs in inventory under absorption costing. Manufacturing overhead deferred in (released from) inventory = Fixed manufacturing overhead in ending inventory - Fixed manufacturing overhead in beginning inventory $5,500 = (Fixed manufacturing overhead per unit × Units in ending inventory) - $0 $5,500 = ($5 per unit × Units in ending inventory) - $0 $5,500 = $5 per unit × Units in ending inventory Units in ending inventory = $5,500 ÷ $5 per unit = 1,100 units Therefore, since there were no beginning inventories and 1,100 units of the 21,500 units that were produced were in ending inventories, sales must have been 20,400 units. "
Channing Corporation has two divisions, C and D. The overall company contribution margin ratio is 30%, with sales in the two divisions totaling $750,000. If variable expenses are $450,000 in Division C and if Division C's contribution margin ratio is 25%, then sales in Division D must be:
"C. $150,000 Total CM ratio = Total contribution margin ÷ Total sales 0.30 = Total contribution margin ÷ $750,000 Total contribution margin = 0.30 × $750,000 = $225,000 Total contribution margin = Total sales - Total variable expenses $225,000 = $750,000 - Total variable expenses Total variable expenses = $750,000 - $225,000 = $525,000 Total variable expenses = Division C variable expenses + Division D variable expenses $525,000 = $450,000 + Division D variable expenses Division D variable expenses = $525,000 - $450,000 = $75,000 CM ratio = 1 - Variable expense ratio 0.25 = 1 - Variable expense ratio Variable expense ratio = 1 - 0.25 = 0.75 Variable expense ratio = Variable expenses ÷ Sales 0.75 = $450,000 ÷ Sales Sales = $450,000 ÷ 0.75 = $600,000 Total sales = Division C sales + Division D sales $750,000 = $600,000 + Division D sales Division D sales = $750,000 - $600,000 = $150,000 "
"Kadle Corporation has two divisions: Division L and Division Q. Data from the most recent month appear below: The break-even in sales dollars for Division Q is closest to: "
"C. $153,030 Division Q: Segment CM ratio = Segment contribution margin ÷ Segment sales = $155,400 ÷ $234,000 = 0.66 Dollar sales for a segment to break even = Segment traceable fixed expenses ÷ Segment CM ratio = $101,000 ÷ 0.66 = $153,030 "
"A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations: What is the total period cost for the month under variable costing? "
"C. $168,200 Variable selling & Admin + Fix. Man OH + Fix Selling & Admin = Var. cost 44,000 + 45,000 + 79,000 = 168,200"
"Hogans Corporation has two divisions: Delta and Echo. Data from the most recent month appear below: The company's common fixed expenses total $64,090. The break-even in sales dollars for Echo Division is closest to: "
"C. $173,469 Echo Division: Segment contribution margin = Segment sales - Segment variable expenses = $221,000 - $112,710 = $108,290 Segment CM ratio = Segment contribution margin ÷ Segment sales = $108,290 ÷ $221,000 = 0.49 Dollar sales for a segment to break even = Segment traceable fixed expenses ÷ Segment CM ratio = $85,000 ÷ 0.49 = $173,469 "
"Carolfi Corporation has two divisions: Division A and Division B. Data from the most recent month appear below: The break-even in sales dollars for Division A is closest to: "
"C. $230,952 Division A: Segment CM ratio = Segment contribution margin ÷ Segment sales = $155,400 ÷ $370,000 = 0.42 Dollar sales for a segment to break even = Segment traceable fixed expenses ÷ Segment CM ratio = $97,000 ÷ 0.42 = $230,952 "
Quinnett Corporation has two divisions: the Export Products Division and the Business Products Division. The Export Products Division's divisional segment margin is $34,300 and the Business Products Division's divisional segment margin is $86,700. The total amount of common fixed expenses not traceable to the individual divisions is $95,600. What is the company's net operating income?
"C. $25,400 Total segment margin = $34,300 + $86,700 = $121,000 Total net operating income = Total segment margin - Common fixed expenses = $121,000 - $95,600 = $25,400 "
"Waltz Corporation has two divisions: Xi and Sigma. Data from the most recent month appear below: The company's common fixed expenses total $65,100. The break-even in sales dollars for Sigma Division is closest to: "
"C. $414,904 Overall CM ratio = Contribution margin ÷ Sales = $214,540 ÷ $434,000 = 0.49 (rounded; the exact value is used in subsequent computations) Dollar sales for the company to break even = (Traceable fixed expenses + Common fixed expenses) ÷ CM ratio = ($140,000 + $65,100) ÷ 0.49 = $414,904 (your answer may differ due to rounding) "
Koen Corporation has two divisions: Division A and Division B. Last month, the company reported a contribution margin of $50,000 for Division A. Division B had a contribution margin ratio of 30% and its sales were $250,000. Net operating income for the company was $30,000 and traceable fixed expenses were $50,000. Koen Corporation's common fixed expenses were:
"C. $45,000 Division B contribution margin = Division B CM ratio × Division B sales = 0.30 × $250,000 = $75,000 Total contribution margin = Division A contribution margin + Division B contribution margin = $50,000 + $75,000 = $125,000 Segment margin = Contribution margin - Traceable fixed expenses = $125,000 - $50,000 = $75,000 Net operating income = Segment margin - Common fixed expenses $30,000 = $75,000 - Common fixed expenses Common fixed expenses = $75,000 - $30,000 = $45,000 "
A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations: What is the variable costing unit product cost for the month?
"C. $90 per unit (DM + DL + Var. Manu Overhead ) = Variable unit product cost 41+43+6 = 90"
"Denner Corporation has two divisions, A and B. The following data pertain to operations in October: If common fixed expenses were $31,000, total fixed expenses were: "
"C. $93,000 Division A: Variable expenses = Variable expense ratio × Sales = 0.70 × $90,000 = $63,000 Division B: Variable expenses = Variable expense ratio × Sales = 0.60 × $150,000 = $90,000 Division A: Segment margin = Contribution margin - Traceable fixed expenses $2,000 = $27,000 - Traceable fixed expenses Traceable fixed expenses = $27,000 - $2,000 = $25,000 Division B: Segment margin = Contribution margin - Traceable fixed expenses $23,000 = $60,000 - Traceable fixed expenses Traceable fixed expenses = $60,000 - $23,000 = $37,000 Total fixed expenses = Traceable fixed expenses + Common fixed expenses = $62,000 + $31,000 = $93,000 "
"Muhn Corporation has two divisions: Division K and Division L. Data from the most recent month appear below: Management has allocated common fixed expenses to the Divisions based on their sales. The break-even in sales dollars for Division K is closest to: "
"D. $159,574 Division K: Segment CM ratio = Segment contribution margin ÷ Segment sales = $116,560 ÷ $248,000 = 0.47 Dollar sales for a segment to break even = Segment traceable fixed expenses ÷ Segment CM ratio = $75,000 ÷ 0.47 = $159,574 "
Sturr Market has 3 stores: P, Q, and R. During October, Store P had a contribution margin of $24,000 and a contribution margin ratio of 30%. Store Q had variable expenses of $48,000 and a contribution margin ratio of 40%. Store R had variable expenses of $84,000 and a variable expense ratio of 70% of sales. Sturr Market's total sales were:
"D. $280,000 Contribution margin = CM ratio × Sales $24,000 = 0.30 × Sales Sales = $24,000 ÷ 0.30 = $80,000 CM ratio = 1 - Variable expense ratio 0.40 = 1 - Variable expense ratio Variable expense ratio = 1 - 0.40 = 0.60 Variable expense ratio = Variable expenses ÷ Sales 0.60 = $48,000 ÷ Sales Sales = $48,000 ÷ 0.60 = $80,000 Variable expense ratio = Variable expenses ÷ Sales 0.70 = $84,000 ÷ Sales Sales = $84,000 ÷ 0.70 = $120,000 "
Swifton Corporation produces a single product. Last year, the company had net operating income of $40,000 using variable costing. Beginning and ending inventories were 22,000 and 27,000 units, respectively. If the fixed manufacturing overhead cost was $3 per unit both last year and this year, what was the income using absorption costing?
"D. $55,000 Manufacturing overhead deferred in (released from) inventory = Fixed manufacturing overhead in ending inventory - Fixed manufacturing overhead in beginning inventory = ($3 per unit × 27,000 units) - ($3 per unit × 22,000 units) = $15,000"
Rede Inc. manufactures a single product. Variable costing net operating income was $63,800 last year and its inventory decreased by 300 units. Fixed manufacturing overhead cost was $4 per unit for both units in beginning and in ending inventory. What was the absorption costing net operating income last year?
"D. $62,600 Manufacturing overhead deferred in (released from) inventory = Fixed manufacturing overhead in ending inventory - Fixed manufacturing overhead in beginning inventory = ($4 per unit × Units in ending inventory) - ($4 per unit × Units in beginning inventory) = $4 per unit × (Units in ending inventory - Units in beginning inventory) = $4 per unit × (-300) = -$1,200 63,800 - 1200 = 62600 "
"Bode Corporation has two divisions: East and West. Data from the most recent month appear below: The company's common fixed expenses total $47,300. 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? "
"D. ($47,300) If a company operates at the break-evens of its segments, the sales will cover variable costs and traceable fixed costs, but not common fixed expenses. Delvin Corporation, which has only one product, has provided the following data concerning its most recent month of operations: "
A company that produces a single product had a net operating income of $75,000 using variable costing and a net operating income of $95,000 using absorption costing. Total fixed manufacturing overhead was $50,000 and production was 10,000 units both this year and last year. Last year was the first year of operations. Between the beginning and the end of the year, the inventory level:
"D. increased by 4,000 units Fixed manufacturing overhead per unit = $50,000 ÷ 10,000 units = $5 per unit Manufacturing overhead deferred in (released from) inventory = Fixed manufacturing overhead in ending inventory - Fixed manufacturing overhead in beginning inventory $20,000 = ($5 per unit × Units in ending inventory) - ($5 per unit × Units in beginning inventory) $20,000 = $5 per unit × (Units in ending inventory - Units in beginning inventory) (Units in ending inventory - Units in beginning inventory) = $20,000 ÷ $5 per unit = 4,000 units "
Hossack Corporation produces a single product and has the following cost structure: The unit product cost under variable costing is:
A. $103 per unit
"Ragins Corporation produces a single product and has the following cost structure: The absorption costing unit product cost is: "
A. $219 per unit
What is the total period cost for the month under the absorption costing?
A. $42,000
Bateman 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?
A. $97 per unit
Under absorption costing, product costs include:
A. Option A
Under absorption costing, fixed manufacturing overhead costs:
A. are deferred in inventory when production exceeds sales.
When sales are constant, but the number of units produced fluctuates, net operating income determined by the absorption costing method will:
A. tend to fluctuate in the same direction as fluctuations in the number of units produced.
"A manufacturing company that produces a single 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? "
B. $12,100
"A manufacturing company that produces a single 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? "
B. $15,900
DC Construction has two divisions: Remodeling and New Home Construction. Each division has an on-site supervisor who is paid a salary of $62,000 annually and one salaried estimator who is paid $36,000 annually. The corporate office has two office administrative assistants who are paid salaries of $40,000 and $32,000 annually. The president's salary is $138,000. How much of these salaries are common fixed expenses?
B. $210,000
What is the total period cost for the month under variable costing?
B. $49,200
"Jarvix 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 unit product cost for the month under variable costing? "
B. $74 per unit
When using data from a segmented income statement, the dollar sales for the company to break even overall is equal to:
B. (Traceable fixed expenses + Common fixed expenses) ÷ Overall CM ratio
"Routsong Corporation had the following sales and production for the past four years: Selling price per unit, variable cost per unit, and total fixed cost are the same each year. There were no beginning inventories in Year 1. Which of the following statements is NOT correct? "
B. Because of the changes in production levels, under variable costing the unit product cost will change each year.
Which of the following costs at a manufacturing company would be treated as a product cost under both absorption costing and variable costing?
B. Option B
"Routit Corporation had the following sales and production for the past four years: Selling price per unit, variable cost per unit, and total fixed cost are the same each year. There were no beginning inventories in Year 1. Which of the following statements is correct? "
B. Under variable costing, net operating income for Year 2 and Year 3 would be the same.
The term gross margin is used in reports prepared using:
B. absorption costing but not variable costing.
George Corporation has no beginning inventory and manufactures a single product. If the number of units produced exceeds the number of units sold, then net operating income under the absorption method for the year will:
B. be greater than the net operating income under variable costing.
When production exceeds sales and the company uses the LIFO inventory flow assumption, the net operating income reported under absorption costing generally will be:
B. greater than net operating income reported under variable costing.
If a cost is a common cost of the segments on a segmented income statement, the cost should:
B. not be allocated to the segments.
A national retail company has segmented its income statement by sales territories. If each sales territory statement is further segmented by individual stores, which of the following will most likely occur?
B. some traceable fixed expenses in the sales territory segmented statement will become common fixed expenses in the individual store segmented statement.
The principal difference between variable costing and absorption costing centers on:
B. whether fixed manufacturing costs should be included in product costs.
"Hardee 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: "
C. $103 per unit
Hossack Corporation produces a single product and has the following cost structure: The unit product cost under absorption costing is:
C. $133 per unit
"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: "
C. $149,600
Gunderman Corporation has two divisions: the Alpha Division and the Charlie Division. The Alpha Division has sales of $230,000, variable expenses of $131,100, and traceable fixed expenses of $63,300. The Charlie Division has sales of $540,000, variable expenses of $307,800, and traceable fixed expenses of $120,700. The total amount of common fixed expenses not traceable to the individual divisions is $119,200. What is the company's net operating income?
C. $27,900
"Jarvix 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 unit product cost for the month under absorption costing? "
C. $81 per unit
Managers will often allocate common fixed expenses to business segments because:
C. they believe this practice will ensure that the company's common fixed expenses are covered.
"A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations: What is the total period cost for the month under absorption costing? "
D. $10,400
"A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations: The total contribution margin for the month under variable costing is: "
D. $120,000
"Bartelt 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 "
D. $183 per unit
"The following data pertain to last year's operations at Tredder Corporation, a company that produces a single product: What was the absorption costing net operating income last year? "
D. $27,000
"Hardee 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 variable costing was: "
D. $33 per unit
Swifton Corporation produces a single product. Last year, the company had net operating income of $40,000 using variable costing. Beginning and ending inventories were 22,000 and 27,000 units, respectively. If the fixed manufacturing overhead cost was $3 per unit both last year and this year, what was the income using absorption costing?
D. $55,000
Sechrest Corporation manufactures a single product. Last year, the company's variable costing net operating income was $80,500. Fixed manufacturing overhead costs released from inventory under absorption costing amounted to $18,400. What was the absorption costing net operating income last year?
D. $62,100
Bateman 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 variable costing?
D. $78 per unit
When using data from a segmented income statement, the dollar sales for a segment to break even is equal to:
D. Traceable fixed expenses ÷ Segment CM ratio
Under variable costing, fixed manufacturing overhead is:
D. expensed as a period cost.
Under variable costing, which of the following is not expensed in its entirety in the period in which it is incurred?
D. variable manufacturing overhead cost
A common fixed cost is a fixed cost that is incurred because of the existence of a particular business segment and that would be eliminated if the segment were eliminated.
FALSE
A common fixed cost is a fixed cost that supports more than one business segment and is traceable in whole or in part to at least one of the business segments.
FALSE
Assuming the LIFO inventory flow assumption, if production is less than sales for the period, absorption costing net operating income will generally be greater than variable costing net operating income
FALSE
Because absorption costing emphasizes costs by behavior, it works well with cost-volume-profit analysis.
FALSE
Common fixed expenses should be allocated to business segments when performing break-even calculations and making decisions.
FALSE
Direct materials is considered to be a product cost under variable costing but not absorption costing.
FALSE
If a cost must be arbitrarily allocated in order to be assigned to a particular segment, then that cost should not be considered a common cost.
FALSE
Under absorption costing, fixed manufacturing overhead cost is not included in product cost.
FALSE
Under conventional absorption costing, the fixed costs associated with idle production capacity are not included as part of the product cost.
FALSE
Under variable costing, variable production costs are not treated as product costs.
FALSE
When the number of units in work in process and finished goods inventories decrease, absorption costing net operating income will typically be greater than variable costing net operating income.
FALSE
When using segmented income statements, the dollar sales for a segment to break even equals the common fixed expenses of the segment divided by the segment CM ratio.
FALSE
When viewed over the long term, cumulative net operating income will be the same for variable and absorption costing if ending inventories exceed beginning inventories.
FALSE
Assuming the LIFO inventory flow assumption, if production equals sales for the period, absorption costing and variable costing will produce the same net operating income.
TRUE
Common fixed costs should not be charged to the individual segments when preparing a segmented income statement.
TRUE
If a company operates at the break even point for each of its segments, it will lose money overall if common fixed expenses exist.
TRUE
Net operating income is affected by the number of units produced when absorption costing is used.
TRUE
Segment margin is a better measure of the long-run profitability of a segment than contribution margin.
TRUE
The costs assigned to units in inventory are typically lower under variable costing than under absorption costing.
TRUE
Under absorption costing, fixed manufacturing overhead is treated as a product cost
TRUE
Under absorption costing, it is possible to defer a portion of the fixed manufacturing overhead costs of the current period to future periods through the inventory account.
TRUE
Under absorption costing, the profit for a period is affected by a change in the number of units of finished goods in inventory.
TRUE
Under variable costing, fixed manufacturing overhead cost is not treated as a product cost.
TRUE
Under variable costing, product cost does not contain any fixed manufacturing overhead cost
TRUE
Under variable costing, product costs consist of direct materials, direct labor, and variable manufacturing overhead.
TRUE
When using segmented income statements, the dollar sales for a company to break even equals the sum of the traceable fixed expenses and the common fixed expenses divided by the overall CM ratio.
TRUE
When variable costing is used, and if selling prices exceed variable expenses and if the unit contribution margins, the sales mix, and fixed costs remain the same, profits move in the same direction as sales.
TRUE
