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Exam 7: Variable Costing and Segment Reporting: Tools for Management

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Question 131

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What was the absorption costing net operating income last year?

A) $113,800
B) $88,600
C) $94,400
D) $76,700

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

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Question 132

Multiple Choice

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What was the absorption costing net operating income this year?

A) $80,000
B) $100,500
C) $108,000
D) $112,200

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

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Question 133

Multiple Choice

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What was the absorption costing net operating income this year?

WV Construction has two divisions: Remodeling and New Home Construction.Each division has an on-site supervisor who is paid a salary of $58,000 annually and one salaried estimator who is paid $52,000 annually.The corporate office has two office administrative assistants who are paid salaries of $38,000 and $31,000 annually.The president's salary is $127,000.How much of these salaries are common fixed expenses?

Lefelmann 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.What is the unit product cost for the month under variable costing? b.What is the unit product cost for the month under absorption costing? c.Prepare a contribution format income statement for the month using variable costing. d.Prepare an income statement for the month using absorption costing. e.Reconcile the variable costing and absorption costing net operating incomes for the month.

What is the unit product cost for the month under variable costing?

Under absorption costing, the unit product cost would be:

The net operating income (loss) under variable costing in Year 1 is closest to:

What is the unit product cost for the month under absorption costing?

The unit product cost under absorption costing in Year 2 is closest to:

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?

What is the total period cost for the month under variable costing?

Zable Corporation has two divisions: Town Division and Country Division.The following report is for the most recent operating period: The company's common fixed expenses total $68,320. Required: a.What is the Town Division's break-even in sales dollars? b.What is the Country Division's break-even in sales dollars? c.What is the company's overall break-even in sales dollars?

Net operating income computed using absorption costing will always be less than net operating income computed using variable costing.

Under variable costing, all variable production costs are treated as product costs.

The net operating income (loss) under variable costing in Year 1 is closest to:

Sherwood 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 variable costing.Compute the unit product cost in each year. c.Assume the company uses absorption costing.Prepare an income statement for 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.

All other things the same, if a division's traceable fixed expenses decrease then the division's segment margin will decrease.

Variable expenses in Store K totaled:

Maher Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Required: a.What is the unit product cost for the month under variable costing? b.What is the unit product cost for the month under absorption costing? c.Prepare a contribution format income statement for the month using variable costing. d.Prepare an income statement for the month using absorption costing. e.Reconcile the variable costing and absorption costing net operating incomes for the month.