chapter 6 s

Chapter 06 - Variable Costing and Segment Reporting: Tools for Management

180. The EG Company produces and sells one product. The following data refer to the year just completed:

Assume that direct labor is a variable cost.

Required:

a. Compute the cost of a single unit of product under both the absorption costing and variable costing approaches.b. Prepare an income statement for the year using absorption costing.c. Prepare a contribution format income statement for the year using variable costing.d. Reconcile the absorption costing and variable costing net operating income figures in (b) and (c) above.

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a. Cost per unit under absorption costing:

b. Absorption costing income statement:

c. Variable costing income statement:

d.

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AACSB: AnalyticAICPA BB: Critical ThinkingAICPA FN: MeasurementBloom's: ApplicationLearning Objective: 06-01 Explain how variable costing differs from absorption costing and compute unit product costs under each methodLearning Objective: 06-02 Prepare income statements using both variable and absorption costingLearning Objective: 06-03 Reconcile variable costing and absorption costing net operating incomes and explain why the two amounts differLevel: Medium

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

Required:

a. What is the unit product cost for the month under variable costing?b. What is the unit product cost for the month under absorption costing?c. Prepare a contribution format income statement for the month using variable costing.d. Prepare an income statement for the month using absorption costing.e. Reconcile the variable costing and absorption costing net operating incomes for the month.

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a. & b. Unit product costs

c. & d. Income statements

e. Reconciliation

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182. Leigh Company, 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 costs per unit and total fixed costs have been constant from month to month.

Required:

a. What is the unit product cost for the month under variable costing?b. What is the unit product cost for the month under absorption costing?c. Prepare a contribution format income statement for the month using variable costing.d. Prepare an income statement for the month using absorption costing.e. Reconcile the variable costing and absorption costing net operating incomes for the month.

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a. & b. Unit product costs

c. & d. Income statements

e. Reconciliation

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AACSB: AnalyticAICPA BB: Critical ThinkingAICPA FN: MeasurementBloom's: ApplicationLearning Objective: 06-01 Explain how variable costing differs from absorption costing and compute unit product costs under each methodLearning Objective: 06-02 Prepare income statements using both variable and absorption costingLearning Objective: 06-03 Reconcile variable costing and absorption costing net operating incomes and explain why the two amounts differLevel: Hard

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

Required:

a. What is the unit product cost for the month under variable costing?b. Prepare a contribution format income statement for the month using variable costing.c. Without preparing an income statement, determine the absorption costing net operating income for the month. (Hint: Use the reconciliation method.)

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a. Variable costing unit product cost

b. Variable costing income statement

c. Computation of absorption costing net operating income


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


Required:

a. What is the unit product cost for the month under variable costing?b. Prepare a contribution format income statement for the month using variable costing.c. Without preparing an income statement, determine the absorption costing net operating income for the month. (Hint: Use the reconciliation method.)

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a. Variable costing unit product cost

b. Variable costing income statement

c. Computation of absorption costing net operating income

AACSB: AnalyticAICPA BB: Critical ThinkingAICPA FN: MeasurementBloom's: ApplicationLearning Objective: 06-01 Explain how variable costing differs from absorption costing and compute unit product costs under each methodLearning Objective: 06-02 Prepare income statements using both variable and absorption costingLearning Objective: 06-03 Reconcile variable costing and absorption costing net operating incomes and explain why the two amounts differLevel: Hard

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185. Hubiak Corporation produces a single product and has the following cost structure:

Required:

Compute the unit product cost under absorption costing. Show your work!

AACSB: AnalyticAICPA BB: Critical ThinkingAICPA FN: MeasurementBloom's: ApplicationLearning Objective: 06-01 Explain how variable costing differs from absorption costing and compute unit product costs under each methodLevel: Easy

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186. Hudalla Corporation produces a single product and has the following cost structure:

Required:

Compute the unit product cost under variable costing. Show your work!


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187. Fellner Corporation produces a single product and has the following cost structure:

Required:

a. Compute the unit product cost under absorption costing. Show your work!b. Compute the unit product cost under variable costing. Show your work!

a. Absorption costing:

b. Variable costing:


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188. Bertone Inc., which produces a single product, has provided the following data for its most recent month of operation:

The company had no beginning or ending inventories.

Required:

Compute the unit product cost under variable costing. Show your work!


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189. Krasnow Inc., which produces a single product, has provided the following data for its most recent month of operation:


Required:

Compute the unit product cost under absorption costing. Show your work!


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190. Cuffee Inc., which produces a single product, has provided the following data for its most recent month of operation:


Required:

a. Compute the unit product cost under absorption costing. Show your work!b. Compute the unit product cost under variable costing. Show your work!

a. Absorption costing:

b. Variable costing:


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191. UHF Antennas, Inc., produces and sells a unique television antenna. The company has just opened a new plant to manufacture the antenna, and the following cost and revenue data have been reported for the first month of the new plant's operation:

Management is anxious to see how profitable the new antenna will be and has asked that an income statement be prepared for the month. Assume that direct labor is a variable cost.

Required:

a. Assuming that the company uses absorption costing, compute the unit product cost and prepare an income statement.b. Assuming that the company uses variable costing, compute the unit product cost and prepare an income statement.c. Explain the reason for any difference in the ending inventories under the two costing methods and the impact of this difference on reported net operating income.

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a. Unit product cost under absorption costing:

b. Unit product cost under variable costing:

c.

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AACSB: AnalyticAICPA BB: Critical ThinkingAICPA FN: MeasurementBloom's: ApplicationLearning Objective: 06-02 Prepare income statements using both variable and absorption costingLevel: Medium

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192. O'Keefe Company, which has only one product, has provided the following data concerning its most recent month of operations:

Required:

a. Prepare a contribution format income statement for the month using variable costing.b. Prepare an income statement for the month using absorption costing.

a. Variable costing income statement

b. Absorption costing income statement

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AACSB: AnalyticAICPA BB: Critical ThinkingAICPA FN: MeasurementBloom's: ApplicationLearning Objective: 06-02 Prepare income statements using both variable and absorption costingLevel: Medium

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


Required:

a. Prepare a contribution format income statement for the month using variable costing.b. Prepare an income statement for the month using absorption costing.

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a. Variable costing income statement

b. Absorption costing income statement

AACSB: AnalyticAICPA BB: Critical ThinkingAICPA FN: MeasurementBloom's: ApplicationLearning Objective: 06-02 Prepare income statements using both variable and absorption costingLevel: Hard

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194. Carvey Corporation manufactures a variety of products. The following data pertain to the company's operations over the last two years:

Required:

a. Determine the absorption costing net operating income for last year. Show your work!b. Determine the absorption costing net operating income for this year. Show your work!

a. and b.

AACSB: AnalyticAICPA BB: Critical ThinkingAICPA FN: MeasurementBloom's: ApplicationLearning Objective: 06-03 Reconcile variable costing and absorption costing net operating incomes and explain why the two amounts differLevel: Medium

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195. Last year, Holroyd Corporation's variable costing net operating income was $95,000. The fixed manufacturing overhead costs deferred in inventory under absorption costing amounted to $29,000.

Required:

Determine the absorption costing net operating income last year. Show your work!

AACSB: AnalyticAICPA BB: Critical ThinkingAICPA FN: MeasurementBloom's: ApplicationLearning Objective: 06-03 Reconcile variable costing and absorption costing net operating incomes and explain why the two amounts differLevel: Easy

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196. Last year, Teneyck Corporation's variable costing net operating income was $63,500 and ending inventory decreased by 200 units. Fixed manufacturing overhead cost per unit was $5.

Required:

Determine the absorption costing net operating income for last year. Show your work!


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197. Salonia Corporation manufactures a variety of products. The following data pertain to the company's operations over the last two years:

Required:

a. Determine the absorption costing net operating income last year. Show your work!b. Determine the absorption costing net operating income this year. Show your work!

a and b.


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198. Cassin Corporation manufactures a variety of products. Last year, the company's variable costing net operating income was $86,300 and ending inventory decreased by 1,700 units. Fixed manufacturing overhead cost per unit was $8.

Required:

Determine the absorption costing net operating income for last year. Show your work!


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199. Gordy Corporation manufactures a variety of products. Last year, variable costing net operating income was $81,000. The fixed manufacturing overhead costs released from inventory under absorption costing amounted to $39,000.

Required:

Determine the absorption costing net operating income last year. Show your work!


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200. Camren Corporation has two major business segments-Apparel and Accessories. Data concerning those segments for December appear below:

Common fixed expenses totaled $357,000 and were allocated as follows: $161,000 to the Apparel business segment and $196,000 to the Accessories business segment.

Required:

Prepare a segmented income statement in the contribution format for the company. Omit percentages; show only dollar amounts.

AACSB: AnalyticAICPA BB: Critical ThinkingAICPA FN: MeasurementBloom's: ApplicationLearning Objective: 06-04 Prepare a segmented income statement that differentiates traceable fixed costs from common fixed costs and use it to make decisionsLevel: Easy

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201. The IT Corporation produces and markets two types of electronic calculators: Model 11 and Model 12. The following data were gathered on activities last month:

Required:

Prepare a segmented income statement in the contribution format for last month.

AACSB: AnalyticAICPA BB: Critical ThinkingAICPA FN: MeasurementBloom's: ApplicationLearning Objective: 06-04 Prepare a segmented income statement that differentiates traceable fixed costs from common fixed costs and use it to make decisionsLevel: Medium

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202. Data for May concerning Dorow Corporation's two major business segments-Fibers and Feedstocks-appear below:

Common fixed expenses totaled $345,000 and were allocated as follows: $186,000 to the Fibers business segment and $159,000 to the Feedstocks business segment.

Required:



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203. Mossor Corporation has two major business segments-Retail and Wholesale. In December, the Retail business segment had sales revenues of $510,000, variable expenses of $296,000, and traceable fixed expenses of $61,000. During the same month, the Wholesale business segment had sales revenues of $510,000, variable expenses of $240,000, and traceable fixed expenses of $82,000. Common fixed expenses totaled $191,000 and were allocated as follows: $113,000 to the Retail business segment and $78,000 to the Wholesale business segment.

Required:



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