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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. Sales Revenue Product Costs Period Costs Jeeps $300,000 $220,000 $25,000 Cell Phones $275,000 $150,000 $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? The company's operating income for the period equals $150,000. The variable cost percentage of the Cell Phone line is 40%. Traceable costs for the Cell Phones

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. Sales Revenue Product Costs Period Costs Jeeps $300,000 $220,000 $25,000 Cell Phones $275,000 $150,000 $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? The company's operating income for the period equals $150,000. The variable cost percentage of the Cell Phone line is 40%. Traceable costs for the Cell Phones

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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. Sales Revenue Product Costs Period Costs Jeeps $300,000 $220,000 $25,000 Cell Phones $275,000 $150,000 $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. Product Cu Period 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? The company's operating income for the period equals $150,000. The variable cost percentage of the Cell Phone line is 40%. Traceable costs for the Cell Phone line are $140.000 * PELVISUU $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 ar 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? The company's operating income for the period equals $150,000. The variable cost percentage of the Cell Phone line is 40%. Traceable costs for the Cell Phone line are $140,000. 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 Jeeps line performance should be analyzed based on a segment margin of $65,000.
Transcribed Image Text: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. Sales Revenue Product Costs Period Costs Jeeps $300,000 $220,000 $25,000 Cell Phones $275,000 $150,000 $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. Product Cu Period 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? The company's operating income for the period equals $150,000. The variable cost percentage of the Cell Phone line is 40%. Traceable costs for the Cell Phone line are $140.000 * PELVISUU $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 ar 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? The company's operating income for the period equals $150,000. The variable cost percentage of the Cell Phone line is 40%. Traceable costs for the Cell Phone line are $140,000. 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 Jeeps line performance should be analyzed based on a segment margin of $65,000.
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