ACCT 2102 TEST 2 CH 6 REVIEW 2

Hayworth Corporation has just segmented last year's income statement into its ten product lines. The chief executive officer (CEO) is curious as to what effect dropping one of the product lines at the beginning of last year would have had on overall company profit. What is the best number for the CEO to look at to determine the effect of this elimination on the net operating income of the company as a whole?

• the product line's sales dollars

• the product line's contribution margin

• the product line's segment margin

• the product line's segment margin minus an allocated portion of common fixed expenses

Higado Confectionery Corporation has a number of store locations throughout North America. In income statements segmented by store, which of the following would be considered a common fixed cost with respect to the stores?

• store manager salaries

• store building depreciation expense

• the cost of corporate advertising aired during the Super Bowl

• cost of goods sold at each store

When using data from a segmented income statement, the dollar sales for a segment to break even is equal to:

• Traceable fixed expenses ÷ Segment CM ratio

• Common fixed expenses ÷ Segment CM ratio

• (Traceable fixed expenses + Common fixed expenses) ÷ Segment CM ratio

• Non-traceable fixed expenses ÷ Segment CM ratio

Allocating common fixed expenses to business segments:

• may cause managers to erroneously discontinue business segments.

• may cause managers to erroneously keep business segments that should be dropped.

• ensures that all costs are covered.

• helps managers make good decisions.

Miscavage Corporation has two divisions: the Beta Division and the Alpha Division. The Beta Division has sales of $300,000, variable expenses of $152,100, and traceable fixed expenses of $70,300. The Alpha Division has sales of $610,000, variable expenses of $335,800, and traceable fixed expenses of $131,900. The total amount of common fixed expenses not traceable to the individual divisions is $133,200. What is the company's net operating income?

• $219,900

• • $422,100

• • $86,700

• • $274,200

Miscavage Corporation has two divisions: the Beta Division and the Alpha Division. The Beta Division has sales of $580,000, variable expenses of $301,600, and traceable fixed expenses of $186,500. The Alpha Division has sales of $510,000, variable expenses of $178,500, and traceable fixed expenses of $222,100. The total amount of common fixed expenses not traceable to the individual divisions is $235,500. What is the company's net operating income?

• $374,400

• • $201,300

• • $609,900

• • ($34,200)

Uchimura Corporation has two divisions: the AFE Division and the GBI Division. The corporation's net operating income is $12,500. The AFE Division's divisional segment margin is $85,100 and the GBI Division's divisional segment margin is $49,500. What is the amount of the common fixed expense not traceable to the individual divisions?

• • 
    $97,600

• • $122,100

• • $62,000

• • $134,600

Dukelow Corporation has two divisions: the Governmental Products Division and the Export Products Division. The Governmental Products Division's divisional segment margin is $39,800 and the Export Products Division's divisional segment margin is $92,200. The total amount of common fixed expenses not traceable to the individual divisions is $104,400. What is the company's net operating income?

• • $236,400

• • $132,000

• • $27,600

• • ($132,000)

Combe Corporation has two divisions: Alpha and Beta. Data from the most recent month appear below:

The company’s common fixed expenses total $90,500. The break-even in sales dollars for Alpha Division is closest to:

• • $448,682

• • $243,000

• • $86,500

• • $205,682

Delisa Corporation has two divisions: Division L and Division Q. Data from the most recent month appear below:

The break-even in sales dollars for Division Q is closest to: 

• • $286,280

• • $240,514

• • $203,877

• • $350,000