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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 $350,000 $220,000 $25,000 Cell Phones $325,000 $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 variable cost percentage of the Cell Phone line is 40%. The Jeeps line performance should be analyzed based on a segment margin of $115,000. Traceable costs for the Cell Phone line are $160,000. If the Cell Phone line was expected to achieve a segment margin of $170,000, management would be pleased with the performance of the division. The company's operating income for the period equals $250,000.

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. Sales Revenue Product Costs Period Costs Jeeps $350,000 $220,000 $25,000 Cell Phones $325,000 $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 variable cost percentage of the Cell Phone line is 40%. The Jeeps line performance should be analyzed based on a segment margin of $115,000. Traceable costs for the Cell Phone line are $160,000. If the Cell Phone line was expected to achieve a segment margin of $170,000, management would be pleased with the performance of the division. The company's operating income for the period equals $250,000.

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter5: Process Costing
Section: Chapter Questions
Problem 1PA: The following product Costs are available for Haworth Company on the production of chairs: direct...
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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 $350,000 $220,000 $25,000 Cell Phones $325,000 $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 variable cost percentage of the Cell Phone line is 40%. The Jeeps line performance should be analyzed based on a segment margin of $115,000. Traceable costs for the Cell Phone line are $160,000. If the Cell Phone line was expected to achieve a segment margin of $170,000, management would be pleased with the performance of the division. The company's operating income for the period equals $250,000.
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 $350,000 $220,000 $25,000 Cell Phones $325,000 $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 variable cost percentage of the Cell Phone line is 40%. The Jeeps line performance should be analyzed based on a segment margin of $115,000. Traceable costs for the Cell Phone line are $160,000. If the Cell Phone line was expected to achieve a segment margin of $170,000, management would be pleased with the performance of the division. The company's operating income for the period equals $250,000.
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