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

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Question 71

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Neef Corporation has provided the following data for its two most recent years of operation: -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

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Question 72

Multiple Choice

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When unit sales are constant,but the number of units produced fluctuates and everything else remains the same,net operating income under variable costing will:

A) fluctuate in direct proportion to changes in production.
B) remain constant.
C) fluctuate inversely with changes in production.
D) be greater than net operating income under absorption costing.

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Question 73

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The following data pertain to last year's operations at Clarkson,Incorporated,a company that produces a single product: What was the absorption costing net operating income last year?

Jemmott Corporation has two divisions: Western Division and Eastern Division. The following report is for the most recent operating period: The common fixed expenses have been allocated to the divisions on the basis of sales. -The company's overall break-even sales is closest to:

The Southern Corporation manufactures a single product and has the following cost structure: Last year, 7,000 units were produced and 6,800 units were sold. There was no beginning inventory. -The carrying value on the balance sheet of the ending inventory of finished goods under variable costing would be:

Tubaugh Corporation has two major business segments--East and West. In December, the East business segment had sales revenues of $690,000, variable expenses of $352,000, and traceable fixed expenses of $104,000. During the same month, the West business segment had sales revenues of $140,000, variable expenses of $56,000, and traceable fixed expenses of $24,000. The common fixed expenses totaled $162,000 and were allocated as follows: $89,000 to the East business segment and $73,000 to the West business segment. -The contribution margin of the West business segment is:

Aaron 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?

The salary paid to a store manager is not a traceable fixed expense of the store.

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

Carriveau Corporation has two divisions: Consumer Division and Business Division. The following data are for the most recent operating period: The company's common fixed expenses total $63,360. -The Business Division's break-even sales is closest to:

Aaron 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 the absorption costing?

Neelon Corporation has two divisions: Southern Division and Northern Division. The following data are for the most recent operating period: The common fixed expenses have been allocated to the divisions on the basis of sales. -The Northern Division's break-even sales is closest to:

Kaaua Corporation has provided the following data for its two most recent years of operation: Which of the following statements is true for Year 2?

Sipho Corporation manufactures a single product.Last year,the company's variable costing net operating income was $90,900.Fixed manufacturing overhead costs released from inventory under absorption costing amounted to $21,900.What was the absorption costing net operating income last year?

Hadley Corporation, 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?

If a cost must be arbitrarily allocated in order to be assigned to a particular segment,then that cost should be considered a common cost.

Which of the following is true of a company that uses absorption costing?

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?

Assuming that direct labor is a variable cost,the primary difference between the absorption and variable costing is that:

Kern Corporation produces a single product. Selected information concerning the operations of the company follow: Assume that direct labor is a variable cost. -Which costing method,absorption or variable costing,would show a higher operating income for the year and by what amount?