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12 20 Consider the following statement 1. A division's net after 2. The division's avoidable fixed costs exceed its contribution margin operating income, after deducting
12 20 Consider the following statement 1. A division's net after 2. The division's avoidable fixed costs exceed its contribution margin operating income, after deducting both traccable and allocsted common fixed costs, is negative. traccable fixed costs plus its allocated common corporate costs exceed its contribution margin. Which of the above statements is a valid reason for climinating the division? A. Only 1. and 2 B. Only 2. and 3 C. Only 1. D. Only 2 E. Only 3. 21 Krugman Company manufactures and sells one product. The following informistion pertains to each of the companys first two years of operations. Variable cost per unit Fixed costs per year Direct materials S89 per unit $1,344,000 $3,472,000 S1,782,000 Direct labor Fixed manufacturing overhead Fixed selling and administrative The company does not incur any variable manufacturing overhead costs or variable selling and administrative expenses. The selling price of the company's product is S227 per unit. Ycar 2 56,000 59,000 car 56,000 53,000 Production (units) Sale (units) The company is considering using either super-variable costing or a variable cesting system that assigns direct labor cost equally to each unit that is produced. Which of the following statements is true regarding the net operating income (NOI) in the first year? A. Variable costing NOl exceeds super-variable costing NOI by $72,000 B. Super-variable costing NOI exceeds variable costing NOl by $72,000 C. Variable costing NOI exceeds super-variable costing NOl by $258,000 D. Super-variable costing NOI exceeds variable costing NOl by $258,000 E. None of the above
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