Skyler White, Inc. manufactures and sells two products: Jeeps and Cell Phones. The following information was extracted from the company's accounting records from last period. Jeeps Cell Phones Sales Revenue $300,000 $275,000 Product Costs $220,000 $150,000 Period Costs $25,000 $30,000 The Jeep product line has the following breakout of product costs: Direct Materials of $60,000, Direct Labor of $30,000, and Manufacturing Overhead of $35,000. The remaining product costs are traceable fixed manufacturing overhead costs. The period costs of the Jeep line are made up of $15,000 of Sales Commissions (which is paid as a percentage of sales revenue), and $10,000 of arbitrarily allocated common fixed costs. The Cell Phone line has a contribution margin percentage of 60%. Of the fixed costs in the Cell Phone line, $30,000 are traceable fixed costs and the remainder are arbitrarily allocated common fixed costs. Which of the following statements is incorrect? Question 9 options: Traceable costs for the Cell Phone line are $140,000. The Jeeps line performance should be analyzed based on a segment margin of $65,000. If the Cell Phone line was expected to achieve a segment margin of $150,000, management would be pleased with the performance of the division. The variable cost percentage of the Cell Phone line is 40%. The company's operating income for the period equals $150,000.
Skyler White, Inc. manufactures and sells two products: Jeeps and Cell Phones. The following information was extracted from the company's accounting records from last period.
| Jeeps | Cell Phones | |
| Sales Revenue | $300,000 | $275,000 |
| Product Costs | $220,000 | $150,000 |
| Period Costs | $25,000 | $30,000 |
The Jeep product line has the following breakout of product costs: Direct Materials of $60,000, Direct Labor of $30,000, and Manufacturing
The Cell Phone line has a contribution margin percentage of 60%. Of the fixed costs in the Cell Phone line, $30,000 are traceable fixed costs and the remainder are arbitrarily allocated common fixed costs.
Which of the following statements is incorrect?
Question 9 options:
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Traceable costs for the Cell Phone line are $140,000.
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The Jeeps line performance should be analyzed based on a segment margin of $65,000.
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If the Cell Phone line was expected to achieve a segment margin of $150,000, management would be pleased with the performance of the division.
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The variable cost percentage of the Cell Phone line is 40%.
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The company's operating income for the period equals $150,000. |
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