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

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Question 31

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Which of the following statements is true for Year 2?

A) The amount of fixed manufacturing overhead released from inventories is $12,000
B) The amount of fixed manufacturing overhead released from inventories is $654,000
C) The amount of fixed manufacturing overhead deferred in inventories is $12,000
D) The amount of fixed manufacturing overhead deferred in inventories is $654,000

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

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Question 32

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When sales exceed production and the company uses the LIFO inventory flow assumption, the net operating income reported under variable costing generally will be:

A) less than net operating income reported under absorption costing.
B) greater than net operating income reported under absorption costing.
C) equal to net operating income reported under absorption costing.
D) higher or lower because no generalization can be made.

E) C) and D)
F) A) and D)

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Question 33

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Moises Corporation manufactures a single product.Last year, the company's variable costing net operating income was $68,000 and ending inventory decreased by 900 units.Fixed manufacturing overhead cost per unit was $6 in both beginning and ending inventory. Required: Determine the absorption costing net operating income for last year.Show your work!

Under variable costing, the unit product cost would be:

Under variable costing, an increase in fixed manufacturing overhead will affect the unit product cost.

What is the net operating income for the month under absorption costing?

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

The net operating income (loss) under variable costing in Year 2 is closest to:

Vancott Inc., which produces a single product, has provided the following data for its most recent month of operation: The company had no beginning or ending inventories. Required: Compute the unit product cost under absorption costing.Show your work!

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

The Foreign Division's break-even sales is closest to:

The total gross margin for the month under the absorption costing approach is:

Under the LIFO inventory flow assumption, if the number of units in inventories increase between the beginning and end of the period, absorption costing net operating income will generally be greater than variable costing net operating income.

The Blue Division's break-even sales is closest to:

The company's overall break-even sales is closest to:

Under variable costing, fixed manufacturing overhead is treated as a product cost.

A properly constructed segmented income statement in a contribution format would show that the net operating income of the company as a whole is:

Under the absorption costing method, a company can increase profits simply by increasing the number of units produced.

Fernstrom Corporation has two divisions: East and West.Data from the most recent month appear below: The company's common fixed expenses total $52,140.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?

The impact on net operating income of a small change in sales for a segment is best predicted by using: