When preparing segmented income statements, traceable fixed costs are those costs that are incurred because of the existence of segment. If the segment was eliminated, the traceable fixed cost would be eliminated.

Are common fixed costs traceable?

When units produced is greater than units sold, net operating income is higher under absorption costing because fixed manufacturing overhead is deferred in inventory whereas it is expensed as a period cost in variable costing. If a company is trying to reconcile their variable costing and absorption costing net income and they begin with variable costing net income, would they need to add fixed manufacturing overhead deferred in inventory under absorption costing or subtract fixed manufacturing overhead deferred in inventory under absorption costing?

f the number of units produced is less than the number of units sold, there will be a decrease in inventory. This will cause a difference in the amount of net income between absorption costing and variable costing operating income. To reconcile absorption costing net income to variable costing net income would you add the amount of fixed manufacturing overhead released from inventory or subtract it from the variable costing net income?

In preparing a segmented income statement, would you allocated common fixed costs to each segment on a pro-rata basis?