Chapter 6 Connect Quiz

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 0Units Produced 6300Units sold 6000Units 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

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

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

Work for Question 2North % 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 85000Common Fixed Expenses

33000

Net Operating Income

$52000All given number will be BOLDED!!!!

45000+33000= 78000Traceable Fixed Expenses+ Common Fixed Expenses= Total Fixed Expenses

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 0Units produced 7300Units sold 7200Units in ending inventory 100

Variable cost per unit:Direct Materials $29Direct Labor $49Variable Manufacturing Overhead $5

Variable Selling and Administrative $4Fixed Costs:Fixed Manufacturing Overhead $94900

Fixed Selling and Administrative $79200

DM+DL+Variable MOH+ Fixed MOH= Absorption costing unit product cost

29+49+5+(94900/7200=13.18)= 96.18

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 17671Common Fixed Expenses

40900 24800 16100

Net Operating Income

$18330 $16760 $1570

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

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 4Production in units

6000 9000 4000 5000

Sales in units

6000 6000 5000 7000

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 CorporationIncome Statement

For the Month Ended March 31Sales (2400 units) $48000Cost of Goods Sold

24000

Gross Margin 24000Selling and Administrative expenses:Fixed $7200Variable 9600 16800Net Operating Income

$7200

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

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 261000Variable Expenses

129000 83520

Traceable Fixed Expenses

102000 109000

Common Fixed Expenses

42000 36540

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

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

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

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

Work to Question 9

50000/10000=5 (95000-75000)/5= 4000 units Increased caused by absorption costing being greater than

variable costing

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 400Units Produced 8800Units sold 8900Units 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

Work to Question 10

Variable costing unit product cost= DM+DL+Variable Manufacturing Overhead

34+37+3= $74 per unit