Assuming that a segment has both variable expenses and traceable fixed expenses,
ID: 2362648 • Letter: A
Question
Assuming that a segment has both variable expenses and traceable fixed expenses, an increase in sales should increase profits by an amount equal to the sales times the segment margin ratio.
A) True
B) False
2. A segment is any portion or activity of an organization about which a manager seeks revenue, cost, or profit data.
A) True
B) False
3. 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?
A) $185,000 B) $117,600 C) $273,200 D) $302,600
4. Which of the following are considered to be product costs under variable costing?
I. Variable manufacturing overhead.
II. Fixed manufacturing overhead.
III. Selling and administrative expenses.
A) I.
B) I and II.
C) I and III.
D) I, II, and III.
5. Abe Company, 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?
A) $99
B) $81
C) $106
D) $88
6. Cockriel 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) $42 B) $43 C) $37 D) $48
7. Tsuchiya Corporation manufactures a variety of products. Last year, the company's variable costing net operating income was $57,500. Fixed manufacturing overhead costs deferred in inventory under absorption costing amounted to $35,400. What was the absorption costing net operating income last year?
A) $22,100 B) $35,400 C) $57,500 D) $92,900
8. Fahey Company manufactures a single product that it sells for $25 per unit. The company has the following cost structure: There were no units in beginning inventory. During the year, 18,000 units were produced and 15,000 units were sold. Under absorption costing, the unit product cost is:
A) $9 B) $12 C) $13 D) $16
Selling $135 Units in beg inventory 0 Units produced 5,000 Units Sold 4,900 Units in ending inventory 100 Variable Cost/unit DM $33 DL $34 Variable MOH $4 Variable selling and adminstration $6 Fixed Costs: Fixed MOH $185,000 Fixed selling and adminstration $88,200Explanation / Answer
Solution:-
1.True
2.True
3.B) $117,600
4.B) I and II.
8.C) $13
EXplanation:-
Production per year 97,000
Variable costs (unit)
Direct materials 34
Direct labor____ 17
Variable manufacturing overhead 26
Fixed costs per year
Fixed manufacturing overhead___ 1,940,000
Operating costs_______________ 2,000,000
Units in beginning inventory_____ 10,000
Units produced_______________ 97,000
Units sold___________________ 92,000
Units in ending inventory_______ 15,000
Selling price per unit__________ $137
Absorption Costing Income Statement
Sales _(92,000 x $137 per unit)______ $12,604,000
Less cost of goods sold:
Beginning inventory (10,000 x $97)___ $970,000
Add Cost of goods produced (97,000 x $97) 9,409,000
Goods available for sale_____________ $10,379,000
Less ending inventory (15,000 x $97)_____ 1,455,000
Cost of Goods Sold_________________ $8,924,000
Gross Margin______________________ $3,680,000
Less
Operating expenses_________________ 2,000,000
Net Income________________________ $1,680,000
Variable Costing Income Staement
Sales _(92,000 x $137 per unit)___________ $12,604,000
Less cost of goods sold:
Beginning inventory (10,000 x $77) _________ $770,000
Add Variable production costs (97,000 x $77)_ 7,469,000
Goods available for sale__________________ $8,239,000
Less ending inventory (15,000 x $77)________ 1,155,000
Variable cost of goods sold________________ 7,084,000
Contribution Margin______________________ 5,520,000
Less: Fixed expenses
Fixed Overhead_________________________ 2,522,000
Operating Costs________________________ 2,000,000
Net Income____________________________ $998,000