1. In multiple product companies, a shift in the sales mix from less profitable products to more profitable products will cause the company's break-even point to...

decrease

2. Herman Corp. has two products, A and B, with the following total sales and total variable costs: (Round your final answer to the nearest whole percent.)
   
   Product A Product B
   Sales $13,200 $38,000
   Variable expenses $7,920 $22,800
   
   What is the overall contribution margin ratio?

40%

3. Variable costing is also known as...

Direct costing and marginal costing.

4. Using the following data, the unit product cost under absorption costing is...
   
   Units produced 1,500
   Direct materials $ 5.40
   Direct labor $ 8.80
   Fixed manufacturing overhead $ 9,375
   Variable manufacturing overhead $ 8.25
   Fixed selling and administrative $ 2,750
   Variable selling and administrative $ 3.20

$28.70

Direct materials $ 5.40
Direct labor 8.80
Variable manufacturing overhead 8.25
Fixed manufacturing overhead ($9,375 ÷ 1,500) 6.25

Unit cost $28.70

5. White Company manufactures a single product and has the following cost structure:
   
   Variable costs per unit:
   Direct materials $3.40
   Direct labor $4.60
   Variable manufacturing overhead $1.20
   Variable selling & administrative expense $2.80
   Fixed costs per month:
   Fixed manufacturing overhead $ 107,000
   Fixed selling & administrative expense $64,200
   
   The company produces 21,400 units each month. Assume beginning inventories are zero, 21,400 units are produced, and 20,120 units are sold in a month. If the unit selling price is $24, what is the net operating income under absorption costing for the month?

$76,640

Variable manufacturing costs (3.40 + $4.60 + $1.20) $9.20
Fixed manufacturing costs ($107,000 ÷ 21,400 units) 5.00

Absorption costing unit product cost $14.20



Sales (20,120 units × $24 per unit) $ 482,880
Cost of goods sold (20,120 × $14.20) 285,704

Gross margin 197,176

Selling and administrative expenses:
Variable selling & administrative (20,120 × $2.80) 56,336
Fixed selling and administrative 64,200

Total selling and administrative 120,536

Net operating income $ 76,640

6. White Company manufactures a single product and has the following cost structure:
   
   
   Variable costs per unit:
   Direct materials $3.50
   Direct labor $4.75
   Variable manufacturing overhead $1.25
   Variable selling & administrative expense $3.00
   Fixed costs per month:
   Fixed manufacturing overhead $107,500
   Fixed selling & administrative expense $64,500
   
   The company produces 21,500 units each month. Assume beginning inventories are zero, 21,500 units are produced, and 20,200 units are sold in a month. If the unit selling price is $25, what is the net operating income under variable costing for the month?

$80,500

Sales (20,200 units × $25 per unit) $505,000
Variable expenses:
Variable cost of goods sold
[20,200 × ($3.50 + $4.75 + $1.25)] 191,900
Variable selling and administrative
(20,200 units × $3.00 per unit) 60,600

Total variable expenses 252,500

Contribution margin 252,500

Fixed expenses:
Fixed manufacturing overhead 107,500
Fixed selling and administrative 64,500

Total fixed expense 172,000

Net operating income $80,500

7. Product cost under absorption costing is characteristically...

higher than under variable costing.

8. Variable costing is attractive to managers as an alternative to absorption costing because...

To generate data for CVP analysis, considerable time would have to be invested to rework income statements constructed under absorption costing.

9. A segment of a business responsible for only revenues and expenses would be referred to as...

a profit center.

10. Rumberger, Inc. sells two products: X and Y. Data concerning the company for July follow:
    
    Product X Product Y
    Sales $214,000 $316,800
    Variable expenses $53,500 $105,600
    Traceable fixed expenses $88,400 $158,400
    
    In addition, common fixed expenses of $81,200 were incurred in July. The net operating income for the entire company is...

$43,700