Question : Steel Fabricating, Inc. manufactures furniture at its plants in Akron, : 1229608

 

 

Steel Fabricating, Inc. manufactures furniture at its plants in Akron, Greensboro, and Schenectady. The company prepares monthly income statements segmented by plant. These income statements are organized to disclose contribution margin, performance margin, and responsibility margin for each plant, in addition to operating income for the company as a whole.

 

 

53. Of the following, which should be classified as a common fixed cost? 
A. Depreciation on the Schenectady factory.
B. Salaries of the plant managers.
C. Salaries of the company’s legal staff.
D. Property taxes on the Akron factory.

 

 

54. The company’s CEO must decide which of the three factories to expand in order to increase productive capacity. She should be most interested in the: 
A. Sales of each factory.
B. Contribution margin at each factory.
C. Fixed costs traceable to each factory.
D. Responsibility margins of each factory.

 

 

55. The Akron factory employs two quality control inspectors at an annual salary of $70,000 each. These salaries should be classified as: 
A. Common fixed cost.
B. Variable cost.
C. Committed fixed cost.
D. Controllable fixed cost.

 

 

56. All of the following costs are traceable to a specific factory except: 
A. Depreciation on the company’s fleet of tractor trailer trucks.
B. Direct materials.
C. Salaries of production supervisors.
D. Wages of production set-up laborers.

 

 

Patterson’s Department Store prepares monthly income statements by sales departments. These income statements are organized to show contribution margin, performance margin, and responsibility margin for each sales department, as well as operating income for the store as a whole.

 

57. The monthly salaries of the employees of the store’s Accounting Department should be classified as a: 
A. Common fixed cost.
B. Traceable fixed cost.
C. Committed fixed cost.
D. Controllable fixed cost.

 

 

58. Depreciation of the fixtures and equipment used exclusively in a particular sales department should be classified as a: 
A. Common fixed cost.
B. Variable cost.
C. Controllable fixed cost.
D. Committed fixed cost.

 

 

59. All of the following costs are traceable to specific sales departments except: 
A. Cost of goods sold.
B. Depreciation of equipment and fixtures used in the department.
C. Advertising a special sale in a particular department.
D. The salary of the store manager.

 

 

60. The cost of heating and air conditioning the store should be: 
A. Allocated among the sales departments based upon relative sales volume.
B. Allocated among the sales departments based upon their relative floor space.
C. Classified as a common fixed cost.
D. Omitted from the segmented income statements.

 

 

61. In deciding how the store will benefit most from increasing the sales of selected departments, the store manager should be most interested in the: 
A. Total sales of each department.
B. Contribution margin ratios of each department.
C. Fixed costs traceable to each department.
D. Responsibility margins of each department.

 

 

62. In the short run, the greatest increase in profitability will result from increasing sales in those profit centers with the: 
A. Highest performance margins.
B. Lowest traceable fixed costs.
C. Highest contribution margin ratios.
D. Highest responsibility margins.

 

 

 

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