Question 1

UHF Antennas,Inc. ,produces and sells a unique television antenna.The company has just opened a new plant to manufacture the antenna,and the following cost and revenue data have been reported for the first month of the new plant's operation:  Management is anxious to see how profitable the new antenna will be and has asked that an income statement be prepared for the month.Assume that direct labor is a variable cost.
Required:
a.Assuming that the company uses absorption costing,compute the unit product cost and prepare an income statement.
b.Assuming that the company uses variable costing,compute the unit product cost and prepare an income statement.
c.Explain the reason for any difference in the ending inventories under the two costing methods and the impact of this difference on reported net operating income.

Accepted Answer

a.Unit product cost ...

Question 2

Falquez Company sells three products: R, S, and T. Data for activity of Falquez Company during July are as follows: Common fixed expenses for July amounted to $90,000.
-Net operating income for the company was:

Accepted Answer

A)  $166,000
B)  $256,000
C)  $334,000
D)  $46,000E) B) and C)
F) None of the above

Question 3

Cuffee 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:
a.Compute the unit product cost under absorption costing.Show your work!
b.Compute the unit product cost under variable costing.Show your work!

Accepted Answer

a.Absorpti...

Question 4

Stryker Corporation has two major business segments-East and West. In April, the East business segment had sales revenues of $500,000, variable expenses of $280,000, and traceable fixed expenses of $80,000. During the same month, the West business segment had sales revenues of $970,000, variable expenses of $514,000, and traceable fixed expenses of $184,000. The common fixed expenses totaled $280,000 and were allocated as follows: $112,000 to the East business segment and $168,000 to the West 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:

Accepted Answer

A)  $412,000
B)  $676,000
C)  -$148,000
D)  $132,000E) B) and C)
F) A) and D)

Question 5

A portion of the total fixed manufacturing overhead cost incurred during a period may:

Accepted Answer

A)  be excluded from cost of goods sold under absorption costing.
B)  be charged as a period cost with the remainder deferred under variable costing.
C)  never be excluded from cost of goods sold under absorption costing.
D)  never be excluded from cost of goods sold under variable costing.E) A) and B)
F) All of the above

Question 6

Whitney, Inc., produces a single product. The following data pertain to one month's operations: 
-The carrying value on the balance sheet of the ending finished goods inventory under absorption costing would be:

Accepted Answer

A)  $16,000
B)  $10,000
C)  $12,000
D)  $21,000E) A) and B)
F) A) and C)

Question 7

In responsibility accounting,each segment in an organization should be charged with the costs for which it is responsible and over which it has control plus its share of common organizational costs.

Accepted Answer

A) True 
 B)False

Question 8

Gordy Corporation manufactures a variety of products.Last year,variable costing net operating income was $81,000.The fixed manufacturing overhead costs released from inventory under absorption costing amounted to $39,000.
Required:
Determine the absorption costing net operating income last year.Show your work!

Accepted Answer

The answer of Gordy Corporation manufactures a variety of products.Last...

Question 9

If the number of units produced exceeds the number of units sold,then net operating income under absorption costing will:

Accepted Answer

A)  be equal to the net operating income under variable costing.
B)  be greater than net operating income under variable costing.
C)  be equal to the net operating income under variable costing plus total fixed manufacturing costs.
D)  be equal to the net operating income under variable costing less total fixed manufacturing costs.E) C) and D)
F) None of the above

Question 10

All other things being equal,if a division's traceable fixed expenses increase:

Accepted Answer

A)  the division's contribution margin ratio will decrease.
B)  the division's segment margin ratio will remain the same.
C)  the division's segment margin will decrease.
D)  the overall company profit will remain the same.E) A) and B)
F) B) and C)

Question 11

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?

Accepted Answer

A)  $58,300
B)  $37,100
C)  $259,900
D)  $201,600E) None of the above
F) C) and D)

Question 12

In an income statement segmented by product line,a fixed expense that cannot be allocated among product lines on a cause-and-effect basis should be:

Accepted Answer

A)  classified as a traceable fixed expense and not allocated.
B)  allocated to the product lines on the basis of sales dollars.
C)  allocated to the product lines on the basis of segment margin.
D)  classified as a common fixed expense and not allocated.E) C) and D)
F) All of the above

Question 13

Routsong Company had the following sales and production data for the past four years:  Selling price per unit,variable cost per unit,and total fixed cost are the same in each year.Which of the following statements is not correct?

Accepted Answer

A)  Under variable costing,net operating income for Year 1 and Year 2 would be the same.
B)  Because of the changes in production levels,under variable costing the unit product cost will change each year.
C)  The total net operating income for all four years combined would be the same under variable and absorption costing.
D)  Under absorption costing,net operating income in Year 4 would be less than the net operating income in Year 2.E) A) and D)
F) C) and D)

Question 14

Enz Corporation manufactures a variety of products. The following data pertain to the company's operations over the last two years: 
-What was the absorption costing net operating income last year?

Accepted Answer

A)  $56,000
B)  $37,000
C)  $57,000
D)  $75,000E) B) and D)
F) B) and C)

Question 15

The Gasson Company sells three products, Product A, Product B and Product C, and had sales of $1,000,000 during the month of June. The company's overall contribution margin ratio was 37% and fixed expenses totaled $350,000. Sales were: Product A, $500,000; Product B, $300,000; and Product C, $200,000. Traceable fixed costs were: Product A, $120,000; Product B, $100,000; and Product C, $60,000. The variable expenses of Product A were $300,000 and the variable expenses of Product B were $180,000.
-The product line segment margin for Product A for June was:

Accepted Answer

A)  $200,000
B)  $80,000
C)  $65,000
D)  $10,000E) All of the above
F) A) and B)

Question 16

DeAnne Company produces a single product. The company's variable costing income statement for August appears below: The company produced 35,000 units in August and the beginning inventory consisted of 8,000 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 August 31 under the absorption costing method is:

Accepted Answer

A)  $27,000
B)  $42,000
C)  $36,000
D)  $47,000E) B) and C)
F) A) and C)

Question 17

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?

Accepted Answer

A)  $103
B)  $99
C)  $94
D)  $90E) A) and C)
F) B) and C)

Question 18

Under absorption costing,the cost of goods sold for the year would be:

Accepted Answer

A)  $206,400
B)  $345,600
C)  $278,400
D)  $360,000E) None of the above
F) A) and C)

Question 19

A company produces a single product.Last year,fixed manufacturing overhead was $30,000,variable production costs were $48,000,fixed selling and administration costs were $20,000,and variable selling administrative expenses were $9,600.There was no beginning inventory.During the year,3,000 units were produced and 2,400 units were sold at a price of $40 per unit.Under variable costing,net operating income would be:

Accepted Answer

A)  a profit of $6,000.
B)  a profit of $4,000.
C)  a loss of $2,000.
D)  a loss of $4,400.E) All of the above
F) A) and D)

Question 20

Roberts Company produces a single product.This year,the company's net operating income under absorption costing was $2,000 lower than under variable costing.The company sold 8,000 units during the year,and its variable costs were $8 per unit,of which $2 was variable selling and administrative expense.If production cost was $10 per unit under absorption costing,then how many units did the company produce during the year? (The company produced the same number of units last year. )

Accepted Answer

A)  7,500 units
B)  7,000 units
C)  9,000 units
D)  8,500 unitsE) A) and C)
F) None of the above

Exam 5: Variable Costing and Segment Reporting: Tools for Management

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a.Unit product cost ...
View Answer

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In an income statement segmented by product line,a fixed expense that cannot be allocated among product lines on a cause-and-effect basis should be:

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In responsibility accounting,each segment in an organization should be charged with the costs for which it is responsible and over which it has control plus its share of common organizational costs.

Correct Answer
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All other things being equal,if a division's traceable fixed expenses increase:

Correct Answer
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Correct Answer
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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?

Correct Answer
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Enz Corporation manufactures a variety of products. The following data pertain to the company's operations over the last two years: -What was the absorption costing net operating income last year?

Correct Answer
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Correct Answer
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a.Absorpti...
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If the number of units produced exceeds the number of units sold,then net operating income under absorption costing will:

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Correct Answer
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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?

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Routsong Company had the following sales and production data for the past four years: Selling price per unit,variable cost per unit,and total fixed cost are the same in each year.Which of the following statements is not correct?

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A portion of the total fixed manufacturing overhead cost incurred during a period may:

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Correct Answer
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Correct Answer
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Under absorption costing,the cost of goods sold for the year would be:

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Falquez Company sells three products: R, S, and T. Data for activity of Falquez Company during July are as follows: Common fixed expenses for July amounted to $90,000. -Net operating income for the company was:

Correct Answer
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Whitney, Inc., produces a single product. The following data pertain to one month's operations: -The carrying value on the balance sheet of the ending finished goods inventory under absorption costing would be:

Correct Answer
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Exam 5: Variable Costing and Segment Reporting: Tools for Management

Correct AnswerverifiedShow Answer

Correct Answerverifieda.Unit product cost ...View AnswerShow Answer

Correct AnswerverifiedShow Answer

In an income statement segmented by product line,a fixed expense that cannot be allocated among product lines on a cause-and-effect basis should be:

Correct AnswerverifiedShow Answer

In responsibility accounting,each segment in an organization should be charged with the costs for which it is responsible and over which it has control plus its share of common organizational costs.

Correct AnswerverifiedShow Answer

All other things being equal,if a division's traceable fixed expenses increase:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

Enz Corporation manufactures a variety of products. The following data pertain to the company's operations over the last two years: -What was the absorption costing net operating income last year?

Correct AnswerverifiedShow Answer

Correct Answerverifieda.Absorpti...View AnswerShow Answer

If the number of units produced exceeds the number of units sold,then net operating income under absorption costing will:

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Correct AnswerverifiedShow Answer

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?

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Routsong Company had the following sales and production data for the past four years: Selling price per unit,variable cost per unit,and total fixed cost are the same in each year.Which of the following statements is not correct?

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A portion of the total fixed manufacturing overhead cost incurred during a period may:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Under absorption costing,the cost of goods sold for the year would be:

Correct AnswerverifiedShow Answer

Falquez Company sells three products: R, S, and T. Data for activity of Falquez Company during July are as follows: Common fixed expenses for July amounted to $90,000. -Net operating income for the company was:

Correct AnswerverifiedShow Answer

Whitney, Inc., produces a single product. The following data pertain to one month's operations: -The carrying value on the balance sheet of the ending finished goods inventory under absorption costing would be:

Correct AnswerverifiedShow Answer

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a.Unit product cost ...
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a.Absorpti...
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