![Work to Question 7
Dollar sales for company to Break Even=
(Traceable Fixed Costs+ Common Fixed Costs)/Overall CM Ratio
Overall CM Ratio= (Sales- Variable Expenses)/Sales
Overall CM Ratio= [(300000+261000)-(129000+83520)]/(300000+261000)
(561000-212520)/561000
.62
Break Even= [(102000+1090000)+(42000+36540)]/.62
(211000+78540)/.62
$466116](https://image.slidesharecdn.com/chapter6connectquiz-160316000730/85/Chapter-6-Connect-Quiz-Variable-Costing-and-Segment-Reporting-Tools-for-Management-14-320.jpg)
Chapter 6 Connect Quiz (Variable Costing and Segment Reporting:Tools for Management)
- 1. Chapter 6 Connect Quiz
- 2. Question 1 Aaker 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: $198000 Selling Price $99 Units in beginning inventory 0 Units Produced 6300 Units sold 6000 Units in ending inventory 300 Variable Costs per unit: Direct Materials $12 Direct Labor $42 Variable Manufacturing Overhead $6 Variable Selling and Administrative $6 Fixed Costs: Fixed Manufacturing Overhead $170100 Fixed Selling and Administrative $24000
- 3. Work for Question 1 Sales- Variable Expenses= Contribution Margin Contribution Margin * units sold= total contribution margin under variable costing (99)- (12+42+6+6)= 33 (33)(6000)= $198000
- 4. Question 2 Meyer Corporation has two sales area: North and South. During April, the contribution margin in the North was $90000, or 30% of sales. The segment margin in the South was $25000, or 10% of sales. Traceable fixed expenses were $30000 in the North and $15000 in the South. Meyer corporation reported a total net operating income of $52000. The total Fixed Expenses for Meyer Corporation were: $78000
- 5. Work for Question 2 North % South % Total Sales 300000 (90000/.3) 100 250000 100 550000 Variable Expenses 210000 (30000*.7) 70 210000 84 420000 Contribution Margin $90000 30 40000 16 130000 Traceable Fixed Expenses $30000 10 $15000 6 45000 Segment Margin 60000 20 $25000 10 85000 Common Fixed Expenses 33000 Net Operating Income $52000 All given number will be BOLDED!!!! 45000+33000= 78000 Traceable Fixed Expenses+ Common Fixed Expenses= Total Fixed Expenses
- 6. Question 3 A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations: What is the absorption costing unit product cost for the month? $96 per unit Units in beginning inventory 0 Units produced 7300 Units sold 7200 Units in ending inventory 100 Variable cost per unit: Direct Materials $29 Direct Labor $49 Variable Manufacturing Overhead $5 Variable Selling and Administrative $4 Fixed Costs: Fixed Manufacturing Overhead $94900 Fixed Selling and Administrative $79200
- 7. DM+DL+Variable MOH+ Fixed MOH= Absorption costing unit product cost 29+49+5+(94900/7200=13.18)= 96.18
- 8. Question 4 Muhn Corporation has 2 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: $159574 Total Company Division K Division L Sales $409000 $248000 $161000 Variable Expenses 216770 131440 85330 Contribution Margin 192230 116560 75670 Traceable Fixed Expenses 133000 75000 58000 Segment Margin 59230 41560 17671 Common Fixed Expenses 40900 24800 16100 Net Operating Income $18330 $16760 $1570
- 9. Work for Question 4 Dollar Sales for a segment to break even= Segment Traceable Fixed Expenses/ Segment CM Ratio CM Ratio= Contribution Margin/Sales CM Ratio= 116560/248000= .47 Dollar sales for a segment to break even= 75000/.47= $159574
- 10. Question 5 Routsong Corporation had the following sales and production for the past 4 years: Selling price per unit, variable cost per unit, and total fixed cost are the same each year. There were no beginning inventories Year 1. Which of the following statements is NOT correct? Because of the changes in production levels, under variable costing the unit product cost will change each year. Year 1 Year 2 Year 3 Year 4 Production in units 6000 9000 4000 5000 Sales in units 6000 6000 5000 7000
- 11. Question 6 Kosco Corporation produces a single product. The company’s absorption costing income statement for March follows: During March, the company’s variable production costs were $8 per unit and its fixed manufacturing overhead totaled $5000. The break even point in units for the month under variable costing would be: 1525 units Kosco Corporation Income Statement For the Month Ended March 31 Sales (2400 units) $48000 Cost of Goods Sold 24000 Gross Margin 24000 Selling and Administrative expenses: Fixed $7200 Variable 9600 16800 Net Operating Income $7200
- 12. Work to Question 6 Break even in units= Fixed Expenses/Unit CM Unit CM= Selling price per unit- variable expenses per unit Selling price per unit= 48000/2400= 20 Variable Expenses per unit= 9600/2400= 4 4+8= 12 Unit CM= 20-12= 8 Fixed Expenses= 5000+7200= 12200 Break Even in units= 12200/8= 1525 units
- 13. Question 7 Sosinski 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 company’s overall break-even sales is closest to: $466,116 Domestic Division Foreign Division Sales 300000 261000 Variable Expenses 129000 83520 Traceable Fixed Expenses 102000 109000 Common Fixed Expenses 42000 36540
- 14. Work to Question 7 Dollar sales for company to Break Even= (Traceable Fixed Costs+ Common Fixed Costs)/Overall CM Ratio Overall CM Ratio= (Sales- Variable Expenses)/Sales Overall CM Ratio= [(300000+261000)-(129000+83520)]/(300000+261000) (561000-212520)/561000 .62 Break Even= [(102000+1090000)+(42000+36540)]/.62 (211000+78540)/.62 $466116
- 15. Question 8 Cutterski Corporation manufactures a propeller. Shown below is Cutterski’s structure: In its first year of operations, Cutterski produced 60000 propellers but only sold 54000. What would Cutterski report as its cost of goods sold under absorption costing? $6885000 Variable cost per propeller Total fixed cost for the year Manufacturing cost 144 810000 Selling and administrative expense 20 243000
- 16. Work to Question 8 CGS under Absorption costing= Total Fixed Manufacturing Costs/units produced= fixed manufacturing cost per unit Fixed Manufacturing cost per unit+ Variable manufacturing cost per unit= unit product cost Unit product cost* number of units sold= CGS under absorption costing 810000/60000= 13.5 13.5+114=127.5 127.5*5400= $6885000
- 17. Question 9 A company that produces a single product has a net operating income of $75000 using variable costing and a net operating income of $95000 using absorption costing. Total fixed manufacturing overhead was $50000 and production was 10000 units both this year and last year. Last year was the first year of operations. Between the beginning and the end of the year, the inventory level: Increased by 4000 units
- 18. Work to Question 9 50000/10000=5 (95000-75000)/5= 4000 units Increased caused by absorption costing being greater than variable costing
- 19. Question 10 Jarvix Corporation, which has only one product, has provided the following data concerning its most recent month of operations: The company produces the same number of units every month, although the sales in units vary from month to month. The company’s variable cost per unit and total fixed costs have been constant from month to month. What is the unit product cost for the month under variable costing? $74 per unit Selling Price $111 Units in beginning inventory 400 Units Produced 8800 Units sold 8900 Units in ending inventory 300 Variable Costs per unit: Direct Materials $34 Direct Labor $37 Variable Manufacturing Overhead $3 Variable Selling and Administrative $9 Fixed Costs: Fixed Manufacturing Overhead $61600 Fixed Selling and Administrative $169100
- 20. Work to Question 10 Variable costing unit product cost= DM+DL+Variable Manufacturing Overhead 34+37+3= $74 per unit