Question
1. Allocating common fixed expenses to business segments: a. may cause managers to erroneously discontinue business segments. b. may cause managers to erroneously keep business
1.
Allocating common fixed expenses to business segments:
a. may cause managers to erroneously discontinue business segments.
b. may cause managers to erroneously keep business segments that should be dropped.
c. ensures that all costs are covered.
d. helps managers make good decisions.
2.
Keyser Corporation, which has only one product, has provided the following data concerning its most recent month of operations:
Selling price | $ | 118 | |
Units in beginning inventory | 400 | ||
Units produced | 2,100 | ||
Units sold | 2,300 | ||
Units in ending inventory | 200 | ||
Variable costs per unit: | ||
Direct materials | $ | 37 |
Direct labor | $ | 23 |
Variable manufacturing overhead | $ | 3 |
Variable selling and administrative expense | $ | 5 |
Fixed costs: | ||
Fixed manufacturing overhead | $ | 73,500 |
Fixed selling and administrative expense | $ | 29,900 |
The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month.
What is the net operating income for the month under variable costing?
3.
Neef Corporation has provided the following data for its two most recent years of operation:
Selling price per unit | $ | 84 |
Manufacturing costs: | ||
Variable manufacturing cost per unit produced: | ||
Direct materials | $ | 12 |
Direct labor | $ | 5 |
Variable manufacturing overhead | $ | 4 |
Fixed manufacturing overhead per year | $ | 432,000 |
Selling and administrative expenses: | ||
Variable selling and administrative expense per unit sold | $ | 5 |
Fixed selling and administrative expense per year | $ | 61,000 |
Year 1 | Year 2 | ||||
Units in beginning inventory | 0 | 3,000 | |||
Units produced | 12,000 | 9,000 | |||
Units sold | 9,000 | 10,000 | |||
Units in ending inventory | 3,000 | 2,0000 | |||
The net operating income (loss) under absorption costing in Year 2 is closest to?
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