31. Last year, Paris Inc.\'s variable costing net operating income was $97,000.

Question

31. Last year, Paris Inc.'s variable costing net operating income was $97,000. Fixed manufacturing overhead costs released from inventory under absorption costing amounted to $14,000. What was the absorption costing net operating income last year? --------------------------------------------------------------------------------------------- 32. During May, Dept. C of Williams Inc. had a segment margin ratio of 15%, a variable expense ratio of 60% of sales, and traceable fixed expenses of $15,000. Dept. C's sales were: --------------------------------------------------------------------------------------------- 33. Downer Inc. has two divisions: the North Division and the South Division. The corporation's net operating income is $88,800. The North Division's divisional segment margin is $39,500 and the South Division's divisional segment margin is $166,900. What is the amount of the common fixed expense not traceable to the individual divisions?

Explanation / Answer

31. Income under Var costing $97,000 Add: Fixed OH under Ab Costing $15,000 ----------------------------------------------- Income under Absorpion costing $112,000 32. We have (Sales - 60% of Sales) - Fixed cost = 15% of Sales ie 0.4*S -15000 = 0.15*S ie 0.25*S = 15000 So Sales = $60,000 33. Amount of the common fixed expense not traceable to the individual divisions = (39500+166900) - 88800 = $117,600

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