Question 1

Taylor Company's budgeted sales were 10,000 units at $200 per unit. Actual sales were 9,200 units at $210 per unit. Taylor's sales volume variance is

Accepted Answer

The answer of Taylor Company's budgeted sales were 10,000 units...

Question 2

Franklin Company's expected sales were 2,000 units at $100 per unit. During 2014, it had actual sales of 1,800 units at $110 per unit. Budgeted variable costs were $60 per unit. What is Franklin's sales price variance?

Accepted Answer

The sales price variance is calculated as (Actual Selling Price - Budgeted Selling Price) x Actual Units Sold. Here, it is ($110 - $100) x 1,800 = $18,000 favorable (F).

Question 3

The following information pertains to Cumberland Corporation:  Absorption costing net income would be how much greater or less than the variable costing net income?

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The answer of The following information pertains to Cumberland Corporation:...

Question 4

Hammerhold Company has two divisions with the following segment margins for the current year: Northern, $250,000; Southern, $450,000. Common expenses of the company are $55,000. What is Hammerhold Company's net income?

Accepted Answer

To calculate net income, we need to subtract the common expenses from the total segment margin.

Total segment margin = Northern segment margin + Southern segment margin 
Total segment margin = $250,000 + $450,000 
Total segment margin = $700,000

Net income = Total segment margin - Common expenses 
Net income = $700,000 - $55,000 
Net income = $645,000

Therefore, the correct answer is C.

Question 5

Normandy Company has the following information pertaining to its two divisions for 2014:  Common expenses are $24,000 for 2014.
What is the operating income for Normandy Company?

Accepted Answer

To calculate the operating income for Normandy Company, we need to subtract the total expenses (including common expenses) from the total revenue generated by both divisions.

Total revenue for both divisions = $350,000 + $40,000 = $390,000

Total expenses for both divisions = $280,000

Operating income before common expenses = $110,000

Operating income after deducting common expenses = $86,000

Therefore, the operating income for Normandy Company is $41,000 (the operating income after deducting common expenses divided by 2 as there are 2 divisions).

Question 6

Which of the following could be considered a segment?

Accepted Answer

All of the options listed (division, product-line, sales territory) could be considered segments in a business context. Divisions refer to different parts or departments within a company, product-lines represent different groups of products or services, and sales territories are specific geographic regions where a company operates. All of these can be segmented and analyzed for business purposes.

Question 7

Consider the following portion of a segmented income statement for the year just ended. Assume that the fixed expenses of Division X include $30,000 of direct expenses and that the discontinuance of the department will not affect the sales of the other departments nor reduce the common expenses.  What is X's divisional segment margin?

Accepted Answer

To calculate divisional segment margin, we need to subtract the variable expenses and fixed expenses of the division from the segment revenue. 
Division X's segment revenue is $50,000. 
Variable expenses are $20,000. 
Fixed expenses are $30,000 direct expenses plus $10,000 allocated common expenses. 
So, divisional segment margin for X is: 
$50,000 - $20,000 - $30,000 - $10,000 = $10,000

Question 8

Normandy Company has the following information pertaining to its two divisions for 2014:  Common expenses are $24,000 for 2014.
What is the segment margin for Division Y?

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The answer of Normandy Company has the following information pertaining...

Question 9

Deep Pit Mining mines three products. Gold ore sells for $1,000 per ton, variable costs are $600 per ton, and fixed mining costs are $250,000. The segment margin for 2014 was $(100,000). The management of Deep Pit Mining was considering dropping the mining of gold ore. Only one-half of the fixed expenses are direct and would be eliminated if the segment was dropped. What were the sales (in tons) for 2014?

Accepted Answer

The segment margin is equal to sales minus variable costs minus fixed costs. So, $100,000 = sales - $600 per ton * tons - $250,000. Since only half of the fixed costs are direct, the fixed costs that would be eliminated if the segment were dropped are $125,000. So, $100,000 = sales - $600 per ton * tons - $125,000. Solving for sales, we get sales = $600 per ton * tons + $225,000. Since the selling price is $1,000 per ton, sales = $1,000 per ton * tons. So, $1,000 per ton * tons = $600 per ton * tons + $225,000. Solving for tons, we get tons = 375 tons.

Question 10

Franklin Company's expected sales were 2,000 units at $100 per unit. During 2014, it had actual sales of 1,800 units at $110 per unit. Budgeted variable costs were $60 per unit. What is Franklin's sales volume variance?

Accepted Answer

The answer of Franklin Company's expected sales were 2,000 units...

Question 11

The following information pertains to Cumberland Corporation:  What is the value of ending inventory using the absorption costing method?

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The answer of The following information pertains to Cumberland Corporation:...

Question 12

Division B earns a contribution margin of $200,000 and has a divisional margin of $70,000. If Division B is closed, all of the direct divisional expenses and $110,000 of common expenses can be eliminated. These facts indicate that closing the division will cause the firm's operating income to

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The answer of Division B earns a contribution margin of...

Question 13

The Crested Butte Company recorded the following data for a product line:  What is the contribution margin of the product line?

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The answer of The Crested Butte Company recorded the following...

Question 14

Sarandon Company has the following information pertaining to its two divisions for 2014:  Common expenses are $12,000 for 2014.
What is the segment margin for Division B?

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The answer of Sarandon Company has the following information pertaining...

Question 15

Consider the following portion of a segmented income statement for the year just ended. Assume that the fixed expenses of Division X include $30,000 of direct expenses and that the discontinuance of the department will not affect the sales of the other departments nor reduce the common expenses.  What would be the effect on the firm's operating income if Division X were discontinued?

Accepted Answer

The answer of Consider the following portion of a segmented...

Question 16

Taylor Company's budgeted sales were 10,000 units at $200 per unit. Actual sales were 9,200 units at $210 per unit. Taylor's sales price variance is

Accepted Answer

The sales price variance is calculated as (Actual Price - Budgeted Price) * Actual Quantity. Here, it is ($210 - $200) * 9,200 = $10 * 9,200 = $92,000 Favorable, because the actual price is higher than the budgeted price.

Question 17

Common segment costs, when contrasted with direct segment costs, are

Accepted Answer

Common segment costs are costs that benefit two or more segments, but are not directly traceable to any specific segment. They are incurred at one level for the benefit of multiple segments. Therefore, common segment costs are a combination of both costs related to more than one segment and indirect costs.

Question 18

The Crested Butte Company recorded the following data for a product line:  What is the segment margin of the product line?

Accepted Answer

The segment margin is calculated by subtracting the total variable costs and direct fixed costs of a segment from its revenue. Unfortunately, the data necessary to calculate the segment margin is missing from the provided information.

Question 19

Sarandon Company has the following information pertaining to its two divisions for 2014:  Common expenses are $12,000 for 2014.
What is the operating income for Sarandon Company?

Accepted Answer

The answer of Sarandon Company has the following information pertaining...

Question 20

Taylor Company's budgeted sales were 10,000 units at $200 per unit. Actual sales were 9,200 units at $210 per unit. Taylor's total sales variance is

Accepted Answer

To calculate the total sales variance, we need to find the difference between the budgeted sales and actual sales at the actual selling price:

Budgeted sales revenue = 10,000 units x $200 = $2,000,000
Actual sales revenue = 9,200 units x $210 = $1,932,000

Total sales variance = Actual sales revenue - Budgeted sales revenue 
Total sales variance = $1,932,000 - $2,000,000 
Total sales variance = $68,000 (U)

Therefore, the answer is choice letter B.

Quiz 18: Pricing and Profitability Analysis

Taylor Company's budgeted sales were 10,000 units at $200 per unit. Actual sales were 9,200 units at $210 per unit. Taylor's sales volume variance is

Franklin Company's expected sales were 2,000 units at $100 per unit. During 2014, it had actual sales of 1,800 units at $110 per unit. Budgeted variable costs were $60 per unit. What is Franklin's sales price variance?

The following information pertains to Cumberland Corporation: Absorption costing net income would be how much greater or less than the variable costing net income?

Hammerhold Company has two divisions with the following segment margins for the current year: Northern, $250,000; Southern, $450,000. Common expenses of the company are $55,000. What is Hammerhold Company's net income?

Normandy Company has the following information pertaining to its two divisions for 2014: Common expenses are $24,000 for 2014. What is the operating income for Normandy Company?

Which of the following could be considered a segment?

Normandy Company has the following information pertaining to its two divisions for 2014: Common expenses are $24,000 for 2014. What is the segment margin for Division Y?

Franklin Company's expected sales were 2,000 units at $100 per unit. During 2014, it had actual sales of 1,800 units at $110 per unit. Budgeted variable costs were $60 per unit. What is Franklin's sales volume variance?

The following information pertains to Cumberland Corporation: What is the value of ending inventory using the absorption costing method?

Division B earns a contribution margin of $200,000 and has a divisional margin of $70,000. If Division B is closed, all of the direct divisional expenses and $110,000 of common expenses can be eliminated. These facts indicate that closing the division will cause the firm's operating income to

The Crested Butte Company recorded the following data for a product line: What is the contribution margin of the product line?

Sarandon Company has the following information pertaining to its two divisions for 2014: Common expenses are $12,000 for 2014. What is the segment margin for Division B?

Taylor Company's budgeted sales were 10,000 units at $200 per unit. Actual sales were 9,200 units at $210 per unit. Taylor's sales price variance is

Common segment costs, when contrasted with direct segment costs, are

The Crested Butte Company recorded the following data for a product line: What is the segment margin of the product line?

Sarandon Company has the following information pertaining to its two divisions for 2014: Common expenses are $12,000 for 2014. What is the operating income for Sarandon Company?

Taylor Company's budgeted sales were 10,000 units at $200 per unit. Actual sales were 9,200 units at $210 per unit. Taylor's total sales variance is