Question

If a cost is a common fixed cost on a segmented income statement, the cost should:

1)	Be allocated to the segments on the basis of segment sales.

2)	Not be allocated to the segments.

3)	Excluded from the income statement.

4)	Treated as a product cost rather than a period cost.

Which of the following capital budget screening methods does not
consider the time value of money?

1)	The Net Present Value.

2)	The Payback Period.

3)	The Profitability Index.

4)	The Internal Rate of Return.

5)	None of the above; all listed methods are considered

If a segment’s variable cost per unit decreases but traceable fixed costs remain the same, then:

1)	Total sales will increase.

2)	Total contribution margin will decrease.

3)	Total segment margin will increase.

4)	The company overall net operating income will decrease due to the change in the variable cost per unit.

Answer 1

Answers:

2) Not to be allocated to the Segments

2) The Payback period Method

3) Total Segment Margin will increases

Common Fixed costs are not to be allocated to the segment, that is reported to the total firm. only Traceable fixed cost on;ly reported to the segment.

the Payback period not considered the Time Value of the Money for Evaluating the Investment Decision.

If the Variable cost per Unit Decreased, total contribution Margin and the Total SEgment MArgin will increase if traceable fixed cost is not Changed.