1. Aaker Corporation reported a total contribution margin of $198,000 for the most recent month. The contribution margin was calculated as (Selling Price - Variable Costs) x Units Sold. 2. Meyer Corporation reported total fixed expenses of $78,000. This was calculated by adding the traceable fixed expenses of $45,000 and the common fixed expenses of $33,000. 3. For a manufacturing company, the absorption costing unit product cost for the month was $96 per unit. This was calculated by taking the variable costs per unit plus the fixed manufacturing overhead costs allocated on a per unit basis.

1. Chapter 6 Connect Quiz

2. Question 1
 Aaker Corporation, which has only one
product, has provided the following data
concerning its most recent month of
operations:
 The total Contribution Margin for the
month under variable costing is:
 $198000
Selling Price $99
Units in beginning inventory 0
Units Produced 6300
Units sold 6000
Units in ending inventory 300
Variable Costs per unit:
Direct Materials $12
Direct Labor $42
Variable Manufacturing Overhead $6
Variable Selling and Administrative $6
Fixed Costs:
Fixed Manufacturing Overhead $170100
Fixed Selling and Administrative $24000

3. Work for Question 1
 Sales- Variable Expenses= Contribution Margin
 Contribution Margin * units sold= total contribution margin under variable costing
 (99)- (12+42+6+6)= 33
 (33)(6000)= $198000

4. Question 2
 Meyer Corporation has two sales area: North and South. During April, the
contribution margin in the North was $90000, or 30% of sales. The segment
margin in the South was $25000, or 10% of sales. Traceable fixed expenses were
$30000 in the North and $15000 in the South. Meyer corporation reported a total
net operating income of $52000. The total Fixed Expenses for Meyer Corporation
were:
 $78000

5. Work for Question 2
North % South % Total
Sales 300000
(90000/.3)
100 250000 100 550000
Variable Expenses 210000
(30000*.7)
70 210000 84 420000
Contribution Margin $90000 30 40000 16 130000
Traceable Fixed
Expenses
$30000 10 $15000 6 45000
Segment Margin 60000 20 $25000 10 85000
Common Fixed
Expenses
33000
Net Operating
Income
$52000
All given number will be BOLDED!!!!
45000+33000= 78000
Traceable Fixed
Expenses+ Common
Fixed Expenses= Total
Fixed Expenses

6. Question 3
 A manufacturing company that produces
a single product has provided the
following data concerning its most recent
month of operations:
 What is the absorption costing unit
product cost for the month?
 $96 per unit
Units in beginning inventory 0
Units produced 7300
Units sold 7200
Units in ending inventory 100
Variable cost per unit:
Direct Materials $29
Direct Labor $49
Variable Manufacturing Overhead $5
Variable Selling and Administrative $4
Fixed Costs:
Fixed Manufacturing Overhead $94900
Fixed Selling and Administrative $79200

7.  DM+DL+Variable MOH+ Fixed MOH= Absorption costing unit product cost
 29+49+5+(94900/7200=13.18)= 96.18

8. Question 4
 Muhn Corporation has 2 Divisions:
Division K and Division L. Data from the
most recent month appear below:
 Management has allocated common fixed
expenses to the divisions based on their
sales. The Break-even in sales dollars for
Division K is closest to:
 $159574
Total
Company
Division K Division L
Sales $409000 $248000 $161000
Variable Expenses 216770 131440 85330
Contribution
Margin
192230 116560 75670
Traceable Fixed
Expenses
133000 75000 58000
Segment Margin 59230 41560 17671
Common Fixed
Expenses
40900 24800 16100
Net Operating
Income
$18330 $16760 $1570

9. Work for Question 4
 Dollar Sales for a segment to break even= Segment Traceable Fixed Expenses/
Segment CM Ratio
 CM Ratio= Contribution Margin/Sales
 CM Ratio= 116560/248000= .47
 Dollar sales for a segment to break even= 75000/.47= $159574

10. Question 5
 Routsong Corporation had the following
sales and production for the past 4 years:
 Selling price per unit, variable cost per
unit, and total fixed cost are the same
each year. There were no beginning
inventories Year 1. Which of the following
statements is NOT correct?
 Because of the changes in production
levels, under variable costing the unit
product cost will change each year.
Year 1 Year 2 Year 3 Year 4
Production
in units
6000 9000 4000 5000
Sales in
units
6000 6000 5000 7000

11. Question 6
 Kosco Corporation produces a single
product. The company’s absorption
costing income statement for March
follows:
 During March, the company’s variable
production costs were $8 per unit and its
fixed manufacturing overhead totaled
$5000. The break even point in units for
the month under variable costing would
be:
 1525 units
Kosco Corporation
Income Statement
For the Month Ended March 31
Sales (2400 units) $48000
Cost of Goods Sold 24000
Gross Margin 24000
Selling and
Administrative
expenses:
Fixed $7200
Variable 9600 16800
Net Operating
Income
$7200

12. Work to Question 6
 Break even in units= Fixed Expenses/Unit CM
 Unit CM= Selling price per unit- variable expenses per unit
 Selling price per unit= 48000/2400= 20
 Variable Expenses per unit= 9600/2400= 4
 4+8= 12
 Unit CM= 20-12= 8
 Fixed Expenses= 5000+7200= 12200
 Break Even in units= 12200/8= 1525 units

13. Question 7
 Sosinski Corporation has two divisions:
Domestic Division and Foreign Division.
The following data are for the most recent
operating period:
 The common fixed expenses have been
allocated to the divisions on the basis of
sales. The company’s overall break-even
sales is closest to:
 $466,116
Domestic
Division
Foreign Division
Sales 300000 261000
Variable Expenses 129000 83520
Traceable Fixed
Expenses
102000 109000
Common Fixed
Expenses
42000 36540

14. Work to Question 7
 Dollar sales for company to Break Even=
 (Traceable Fixed Costs+ Common Fixed Costs)/Overall CM Ratio
 Overall CM Ratio= (Sales- Variable Expenses)/Sales
 Overall CM Ratio= [(300000+261000)-(129000+83520)]/(300000+261000)
 (561000-212520)/561000
 .62
 Break Even= [(102000+1090000)+(42000+36540)]/.62
 (211000+78540)/.62
 $466116

15. Question 8
 Cutterski Corporation manufactures a
propeller. Shown below is Cutterski’s
structure:
 In its first year of operations, Cutterski
produced 60000 propellers but only sold
54000. What would Cutterski report as its
cost of goods sold under absorption
costing?
 $6885000
Variable cost per
propeller
Total fixed cost
for the year
Manufacturing
cost
144 810000
Selling and
administrative
expense
20 243000

16. Work to Question 8
 CGS under Absorption costing=
 Total Fixed Manufacturing Costs/units produced= fixed manufacturing cost per unit
 Fixed Manufacturing cost per unit+ Variable manufacturing cost per unit= unit product
cost
 Unit product cost* number of units sold= CGS under absorption costing
 810000/60000= 13.5
 13.5+114=127.5
 127.5*5400= $6885000

17. Question 9
 A company that produces a single product has a net operating income of $75000
using variable costing and a net operating income of $95000 using absorption
costing. Total fixed manufacturing overhead was $50000 and production was
10000 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:
 Increased by 4000 units

18. Work to Question 9
 50000/10000=5
 (95000-75000)/5= 4000 units
 Increased caused by absorption costing being greater than variable costing

19. Question 10
 Jarvix Corporation, 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 cost per unit and total
fixed costs have been constant from month
to month. What is the unit product cost for
the month under variable costing?
 $74 per unit
Selling Price $111
Units in beginning inventory 400
Units Produced 8800
Units sold 8900
Units in ending inventory 300
Variable Costs per unit:
Direct Materials $34
Direct Labor $37
Variable Manufacturing Overhead $3
Variable Selling and Administrative $9
Fixed Costs:
Fixed Manufacturing Overhead $61600
Fixed Selling and Administrative $169100

20. Work to Question 10
 Variable costing unit product cost=
 DM+DL+Variable Manufacturing Overhead
 34+37+3= $74 per unit