2. Managers will often allocate common fixed expenses to business segments because:

a. not allocating these costs will lead to bad decisions.

b. they believe this practice will ensure that the company's common fixed expenses are covered.

c. this is required by law.

d. they do not want the sum of the business segment margins to equal the net operating income for the company.

5. Insider Corporation has two divisions, J and K. During March, the contribution margin in Division J was $31,000. The contribution margin ratio in Division K was 40%, its sales were $126,000, and its segment margin was $33,000. The common fixed expenses in the company were $41,000, and the company's net operating income was $18,500. The segment margin for Division J was:

a. $33,000

b. $8,000

c. $59,500

d. $26,500

6. When sales are constant, but the number of units produced fluctuates, net operating income determined by the absorption costing method will:

a. tend to fluctuate in the same direction as fluctuations in the number of units produced.

b. fluctuate without any relation to the number of units produced.

c. tend to remain constant.

e. tend to fluctuate in the opposite direction as fluctuations in the number of units produced.

7. A company that produces a single product had a net operating income of $82,000 using variable costing and a net operating income of $108,790 using absorption costing. Total fixed manufacturing overhead was $54,570 and production was 10,700 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: (Do not round intermediate computation and round your final answer to nearest whole number.)

a. decreased by 5,253 units

b. increased by 5,253 units

c. increased by 26,790 units

d. decreased by 26,790 units

8. Khanam Corporation, which has only one product, has provided the following data concerning its most recent month of operations:

Selling price	$149
Units in beginning inventory	1,150
Units produced	9,050
Units sold	9,150
Units in ending inventory	1,050
Variable costs per unit:
Direct materials	$33
Direct labor	$50
Variable manufacturing overhead	$14
Variable selling and administrative	$24
Fixed costs:
Fixed manufacturing overhead	$72,400
Fixed selling and administrative	$165,400

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 absorption costing?

a. $28,100

b. $4,500

c. $4,500

d. $17,600

9. Under absorption costing, fixed manufacturing overhead costs:

a. are always treated as period costs.

b. are deferred in inventory when production exceeds sales.

c. are released from inventory when production exceeds sales.

d. are ignored.

10. Deboer Company, which has only one product, has provided the following data concerning its most recent month of operations:

Selling price	$186
Units in beginning inventory	200
Units produced	2,010
Units sold	1,230
Units in ending inventory	980
Variable costs per unit:
Direct materials	$81
Direct labor	$29
Variable manufacturing overhead	$9
Variable selling and administrative	$9
Fixed costs:
Fixed manufacturing overhead	$20,100
Fixed selling and administrative	$23,370

What is the total period cost for the month under the variable costing approach?

a. $20,100

b. $54,540

c. $43,470

d. $34,440