Chapter 06 – Variable Costing and Segment Reporting: Tools for Management
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143. What was the absorption costing net operating income this year?
Enz Corporation manufactures a variety of products. The following data pertain to the
company’s operations over the last two years:
Chapter 06 – Variable Costing and Segment Reporting: Tools for Management
144. What was the absorption costing net operating income last year?
145. What was the absorption costing net operating income this year?
Chapter 06 – Variable Costing and Segment Reporting: Tools for Management
Vanstee Corporation manufactures a variety of products. Variable costing net operating
income last year was $60,000 and this year was $67,000. Last year, $37,000 in fixed
manufacturing overhead costs were deferred in inventory under absorption costing. This year,
$8,000 in fixed manufacturing overhead costs were released from inventory under absorption
costing.
146. What was the absorption costing net operating income last year?
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147. What was the absorption costing net operating income this year?
Condit Corporation manufactures a variety of products. Variable costing net operating
income was $75,600 last year and was $80,100 this year. Last year, inventory decreased by
3,400 units. This year, inventory increased by 3,000 units. Fixed manufacturing overhead cost
is $5 per unit.
Chapter 06 – Variable Costing and Segment Reporting: Tools for Management
148. What was the absorption costing net operating income last year?
Chapter 06 – Variable Costing and Segment Reporting: Tools for Management
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149. What was the absorption costing net operating income this year?
The Rial Company’s income statement for June is given below:
Chapter 06 – Variable Costing and Segment Reporting: Tools for Management
150. If sales for Division F increase $40,000 with a $10,000 increase in the Division’s
traceable fixed costs, the overall company net operating income should:
Chapter 06 – Variable Costing and Segment Reporting: Tools for Management
151. During June, the sales clerks in Division F received salaries totaling $35,000. Assume
that during July the salaries of these sales clerks are discontinued and instead they are paid a
commission of 18% of sales. If sales in Division F increase by $65,000 as a result of this
change, the July segment margin for Division F should be:
Chapter 06 – Variable Costing and Segment Reporting: Tools for Management
152. If the sales in Division L increase by 30% while common fixed expenses in the company
decrease by $10,000, the segment margin for Division L should:
153. A proposal has been made that will lower variable expenses in Division L to 35% of
sales. However, this reduction can only be accomplished by a $15,000 increase in Division
L’s traceable fixed expenses. If this proposal is implemented and if sales remain constant,
overall company net operating income should:
Chapter 06 – Variable Costing and Segment Reporting: Tools for Management
Pong Incorporated’s income statement for the most recent month is given below.
154. If Store G sales increase by $40,000 with no change in fixed costs, the overall company
net operating income should:
Chapter 06 – Variable Costing and Segment Reporting: Tools for Management
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155. The marketing department believes that a promotional campaign for Store H costing
$8,000 will increase the store’s sales by $15,000. If the campaign is adopted, overall company
net operating income should:
Ring, Incorporated’s income statement for the most recent month is given below.
For each of the following questions, refer back to the original data.
Chapter 06 – Variable Costing and Segment Reporting: Tools for Management
156. If Store Q sales increase by $30,000 with no change in fixed expenses, the overall
company net operating income should:
157. The marketing department believes that a promotional campaign at Store P costing
$5,000 will increase sales by $15,000. If the campaign is adopted, overall company net
operating income should:
Chapter 06 – Variable Costing and Segment Reporting: Tools for Management
158. A proposal has been made that will lower variable costs in Store P to 65% of sales.
However, this reduction can only be accomplished by a $16,000 increase in Store P’s
traceable fixed costs. If this proposal is implemented and sales remain constant, overall
company net operating income should:
Chapter 06 – Variable Costing and Segment Reporting: Tools for Management
159. If sales in Store Q increase by $30,000 as a result of a $7,000 increase in traceable fixed
costs:
Chapter 06 – Variable Costing and Segment Reporting: Tools for Management
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160. Currently the sales clerks receive a salary of $17,000 per month in Store Q. A proposal
has been made to change from a fixed salary to a sales commission of 5%. Assume that this
proposal is adopted, and that as a result sales in Store Q increase by $40,000. The new
segment margin for Store Q should be:
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.
Chapter 06 – Variable Costing and Segment Reporting: Tools for Management
161. The net operating income for the company as a whole for June was:
Chapter 06 – Variable Costing and Segment Reporting: Tools for Management
162. The contribution margin ratio for Product C is:
Chapter 06 – Variable Costing and Segment Reporting: Tools for Management
163. The common fixed expense for Gasson Company for the month of June was:
164. The product line segment margin for Product A for June was:
Chapter 06 – Variable Costing and Segment Reporting: Tools for Management
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165. The contribution margin in dollars for Product B for June was:
Tennison Corporation has two major business segments-Consumer and Commercial. Data for
the segment and for the company for May appear below:
In addition, common fixed expenses totaled $371,000 and were allocated as follows:
$186,000 to the Consumer business segment and $185,000 to the Commercial business
segment.
Chapter 06 – Variable Costing and Segment Reporting: Tools for Management
166. The contribution margin of the Commercial business segment is:
167. A properly constructed segmented income statement in a contribution format would
show that the segment margin of the Consumer business segment is: