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Exam 6: Variable Costing and Segment Reporting: Tools for Management

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Question 71

Multiple Choice

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Paparelli Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 25,500 units and sold 16,500 units. The company's only product is sold for $227 per unit.The net operating income (loss) for the year under super-variable costing is:

A) $(128,000)
B) $(329,000)
C) $947,000
D) $9,000

E) C) and D)
F) All of the above

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Question 72

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Hadley Corporation, which has only one 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?

A) $69,980
B) $29,680
C) $59,130
D) $40,300

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

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Question 73

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A reason why absorption costing income statements are sometimes difficult to interpret is that:

Uchimura Corporation has two divisions: the AFE Division and the GBI Division. The corporation's net operating income is $42,000. The AFE Division's divisional segment margin is $15,700 and the GBI Division's divisional segment margin is $175,400. What is the amount of the common fixed expense not traceable to the individual divisions?

Croft Corporation produces a single product. Last year, the company had a net operating income of $160,000 using absorption costing and $149,000 using variable costing. The fixed manufacturing overhead cost was $10 per unit. There were no beginning inventories. If 43,000 units were produced last year, then sales last year were:

Super-variable costing is a costing method that treats direct labor and manufacturing overhead costs as product costs.

Nuzum 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:

The super-variable costing net operating income period can be computed by multiplying the number of units sold by the gross margin per unit.

Wolanski Corporation has provided the following data for its most recent year of operations: The net operating income (loss) under absorption costing is closest to:

Elbrege Corporation manufactures a single product. The company has supplied the following data: There was no beginning inventory. During the year 25,000 units were produced and 20,000 units were sold.The company's net operating income for the year under variable costing would be:

Data for January for Bondi Corporation and its two major business segments, North and South, appear below: In addition, common fixed expenses totaled $179,000 and were allocated as follows: $93,000 to the North business segment and $86,000 to the South business segment.A properly constructed segmented income statement in a contribution format would show that the net operating income of the company as a whole is:

Higado Confectionery Corporation has a number of store locations throughout North America. In income statements segmented by store, which of the following would be considered a common fixed cost with respect to the stores?

Nelter 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.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.

Wolanski Corporation has provided the following data for its most recent year of operations: The net operating income (loss) under variable costing is closest to:

Waltzer Corporation has provided the following data for its two most recent years of operation: Required: a. Assume the company uses absorption costing. Compute the unit product cost in each year. b. Assume the company uses absorption costing. Prepare an income statement for each year. c. Assume the company uses variable costing. Compute the unit product cost in each year. d. Assume the company uses variable costing. Prepare an income statement for each year. e. Prepare a report in good form reconciling the variable costing and absorption costing net incomes.

Azuki Corporation operates in two sales territories, Urban and Rural. Data concerning last year's operations appear below: Azuki's common fixed expenses were $25,000 last year.If Urban sales were 10% higher last year, by approximately how much would Azuki's net operating income have increased? (Assume no change in selling prices, unit variable expenses, or total fixed expenses.)

Dallavalle Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 32,000 units and sold 31,000 units. The company's only product is sold for $238 per unit.The company is considering using either super-variable costing or an absorption costing system that assigns $10 of direct labor cost and $67 of fixed manufacturing overhead to each unit that is produced. Which of the following statements is true regarding the net operating income in the first year?

Cadavieco Corporation has provided the following data for its two most recent years of operation: Required: a.Assume the company uses absorption costing. Compute the unit product cost in each year. b. Assume the company uses absorption costing. Prepare an income statement for each year. c. Assume the company uses variable costing. Compute the unit product cost in each year. d. Assume the company uses variable costing. Prepare an income statement for each year.

Elison Corporation, 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?

Helmers Corporation manufactures a single product. Variable costing net operating income last year was $86,000 and this year was $103,000. Last year, $32,000 in fixed manufacturing overhead costs were released from inventory under absorption costing. This year, $12,000 in fixed manufacturing overhead costs were deferred in inventory under absorption costing.What was the absorption costing net operating income this year?