chapter 7 smartbook part.2

Question 1

The segment margin represents the ________.

excess of the segment revenue over the segment cost of goods sold

margin remaining after traceable and common fixed costs have been deducted

margin available after a segment has covered all of its own costs

margin available to cover fixed costs

Answer 1

margin available after a segment has covered all of its own costs

Question 2

Absorption costing net operating income may not agree with the net operating income calculated for CVP analysis due to the way in which______ is handled in absorption costing.

direct labor cost

variable manufacturing overhead

fixed manufacturing overhead

fixed selling and administrative expense

Answer 2

fixed manufacturing overhead

Question 3

Only costs that would disappear over time if a segment disappeared should be treated as _________ fixed costs.

Answer 3

traceable

Question 4

One mistake companies make when preparing segmented income statements is arbitrarily assigning __________fixed costs to segments. (Enter only one word per blank.)

Answer 4

common

Question 5

Bart’s Inc. operates retail stores in various cities. Segmented income statements are prepared for each store and for each product line in each store. The property tax of a store is the __________ fixed cost of the store and the _________
fixed cost of each product line sold in the store.

Answer 5

Traceable; Common

Question 6

Assigning common fixed costs to segments impacts ______.

Answer 6

segment margin only

total corporate profit only

Reason: Total profit for the company includes common fixed costs.

neither segment margin nor total corporate profit

Reason: Total profit for the company includes common fixed costs.

both segment margin and total corporate profit