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
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Chapter2: Building Blocks Of Managerial Accounting
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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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