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Exam 4: Variable Costing and Segment Reporting: Tools for Management

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Question 61

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Elbrege Corporation manufactures a single product. The company has supplied the following data: There was no beginning inventory. During the year 25,000 units were produced and 20,000 units were sold. Under absorption costing, the unit product cost would be:

A) $7 per unit
B) $16 per unit
C) $11 per unit
D) $10 per unit

E) A) and C)
F) B) and C)

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Question 62

Multiple Choice

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Bryans Corporation has provided the following data for its two most recent years of operation: The unit product cost under absorption costing in Year 2 is closest to:

A) $33.00
B) $9.00
C) $24.00
D) $37.00

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

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Question 63

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

Aaron Corporation, which has only one product, has provided the following data concerning its most recent month of operations: What is the net operating income for the month under variable costing?

Aaron Corporation, which has only one product, has provided the following data concerning its most recent month of operations: The total contribution margin for the month under variable costing is:

Borunda Corporation has provided the following data for its two most recent years of operation: Required: a. Assume the company uses absorption costing. Prepare an income statement for each year. b. Assume the company uses variable costing. Prepare an income statement for each year. c. Prepare a report in good form reconciling the variable costing and absorption costing net incomes.

Hayworth Corporation has just segmented last year's income statement into its ten product lines. The chief executive officer (CEO) is curious as to what effect dropping one of the product lines at the beginning of last year would have had on overall company profit. What is the best number for the CEO to look at to determine the effect of this elimination on the net operating income of the company as a whole?

Tat Corporation produces a single product and has the following cost structure: The unit product cost under absorption costing 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?

Davison 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?

A company produces a single product. Variable production costs are $21 per unit and variable selling and administrative expenses are $4 per unit. Fixed manufacturing overhead totals $30,000 and fixed selling and administration expenses total $36,000. Assuming a beginning inventory of zero, production of 6,000 units and sales of 5,600 units, the dollar value of the ending inventory under variable costing would be:

Norenberg Corporation manufactures a single product. The following data pertain to the company's operations over the last two years: What was the absorption costing net operating income last year?

Which of the following costs at a manufacturing company would be treated as a product cost under variable costing?

Else 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.

Tustin Corporation has provided the following data for its two most recent years of operation: The net operating income (loss) under variable costing in Year 1 is closest to:

Mandato Corporation has provided the following data for its two most recent years of operation: The net operating income (loss) under absorption costing in Year 1 is closest to:

Masley Corporation has provided the following data for its two most recent years of operation: In Year 1, 10,000 units were produced and in Year 2, 7,000 units were produced. 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.

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

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

Worrel Corporation manufactures a single product. The following data pertain to the company's operations over the last two years: Required: a. Determine the absorption costing net operating income last year. Show your work! b. Determine the absorption costing net operating income this year. Show your work!