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

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Question 1

Multiple Choice

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Kray 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) $91 per unit
B) $67 per unit
C) $69 per unit
D) $61 per unit

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

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B

Question 2

Multiple Choice

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Krepps Corporation produces a single product. Last year, Krepps manufactured 20,000 units and sold 15,000 units. Production costs for the year were as follows: Sales totaled $825,000 for the year, variable selling and administrative expenses totaled $108,000, and fixed selling and administrative expenses totaled $165,000. There was no beginning inventory. Assume that direct labor is a variable cost. The contribution margin per unit was:

A) $23.80 per unit
B) $31.00 per unit
C) $25.60 per unit
D) $19.00 per unit

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

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Question 3

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Boylston Corporation has provided the following data for its two most recent years of operation. The company makes a product that it sells for $75 per unit. It began Year 1 with no units in beginning inventory. 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. c. Assume the company uses absorption costing. Prepare an income statement for each year. d. Assume the company uses variable costing. Prepare an income statement for each year.

Krepps Corporation produces a single product. Last year, Krepps manufactured 20,000 units and sold 15,000 units. Production costs for the year were as follows: Sales totaled $825,000 for the year, variable selling and administrative expenses totaled $108,000, and fixed selling and administrative expenses totaled $165,000. There was no beginning inventory. Assume that direct labor is a variable cost. Under variable costing, the company's net operating income for the year would be:

Muckleroy Corporation has two divisions: Division K and Division L. Data from the most recent month appear below: Management has allocated common fixed expenses to the Divisions based on their sales. The break-even in sales dollars for Division K is closest to:

Smidt Corporation has provided the following data for its two most recent years of operation: The unit product cost under variable costing in Year 1 is closest to:

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

Under variable costing, only variable production costs are treated as product costs.

Plummer Corporation has provided the following data for its two most recent years of operation: The unit product cost under variable costing in Year 1 is closest to:

Wyrich Corporation has two divisions: Blue Division and Gold Division. The following report is for the most recent operating period: The company's overall break-even sales is closest to:

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:

Gardella Corporation has two divisions: Domestic Division and Foreign 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 Foreign Division's break-even sales is closest to:

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:

Corbett Corporation manufactures a single product. Last year, variable costing net operating income was $72,000. The fixed manufacturing overhead costs deferred in inventory under absorption costing amounted to $29,000. Required: Determine the absorption costing net operating income last year. Show your work!

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?

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 Southern Division's break-even sales is closest to:

Danahy 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 this year?

Beamish 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 absorption costing unit product cost was:

Bryans Corporation has provided the following data for its two most recent years of operation: The net operating income (loss) under variable costing in Year 2 is closest to:

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