Question 1

Salary of top management and general-administration costs is an example of which of the following?

Accepted Answer

A)  customer output unit-level costs 
B)  customer batch-level costs 
C)  distribution-channel costs 
D)  corporate-sustaining costs 
A)  customer output unit-level costs 
B)  customer batch-level costs 
C)  distribution-channel costs 
D)  corporate-sustaining costs

Question 2

Sales-mix variance = $300,000 (F), sales-quantity variance = $250,000 (F), flexible-budget variance = $120,000 (F), market-size variance = $80,000 (U), calculate the sales-volume variance.

Accepted Answer

A)  $750,000 (F) 
B)  $500,000 (F) 
C)  $630,000 (F) 
D)  $550,000 (F) 
A)  $750,000 (F) 
B)  $500,000 (F) 
C)  $630,000 (F) 
D)  $550,000 (F)

Question 3

More insight into the static-budget variance can be gained by subdividing it into ________.

Accepted Answer

A)  the sales-mix variance and the sales-quantity variance 
B)  the market-share variance and the market-size variance 
C)  the flexible-budget variance and the sales-volume variance 
D)  the flexible-budget variance and the sales-mix variance 
A)  the sales-mix variance and the sales-quantity variance 
B)  the market-share variance and the market-size variance 
C)  the flexible-budget variance and the sales-volume variance 
D)  the flexible-budget variance and the sales-mix variance

Question 4

When corporate-sustaining costs are fully allocated to distribution channels, then the sum of the operating income from each distribution-channel is ________.

Accepted Answer

A)  greater than company wide operating income 
B)  equal to company wide operating income 
C)  equal to customer-level operating income 
D)  greater than customer-level operating income 
A)  greater than company wide operating income 
B)  equal to company wide operating income 
C)  equal to customer-level operating income 
D)  greater than customer-level operating income

Question 5

Customers making large contributions to the profitability of the company should ________.

Accepted Answer

A)  be treated the same as other customers because all customers are important 
B)  receive a higher level of attention from the company than less profitable customers 
C)  be charged higher prices for the same products than less profitable customers 
D)  not be offered the volume-based price discounts offered to less profitable customers 
A)  be treated the same as other customers because all customers are important 
B)  receive a higher level of attention from the company than less profitable customers 
C)  be charged higher prices for the same products than less profitable customers 
D)  not be offered the volume-based price discounts offered to less profitable customers

Question 6

Consider revenues from three of Megafy's 10 wholesale customers in 2015:
   
What conclusions can be drawn from the above data? What steps can the manager of the company take?

Accepted Answer

The company managers may decide to stric

Question 7

When the cost pools are homogeneous which of the following will be true?

Accepted Answer

A)  the number of needed cost pools will be more 
B)  the costs in the cost pool have a similar cause-and-effect or benefits-received relationship with the cost-allocation base 
C)  managers should not allocate both variable costs and costs that are fixed in the short-run 
D)  there will be a greater variety of cause-and-effect, benefits-received, or fair-and-equitable relationship with the cost-allocation base 
A)  the number of needed cost pools will be more 
B)  the costs in the cost pool have a similar cause-and-effect or benefits-received relationship with the cost-allocation base 
C)  managers should not allocate both variable costs and costs that are fixed in the short-run 
D)  there will be a greater variety of cause-and-effect, benefits-received, or fair-and-equitable relationship with the cost-allocation base

Question 8

A company has two distribution channels: wholesale and business sales. Which of the following costs would be allocated as distribution-channel-level costs when analyzing the profitability of customer distribution channels?

Accepted Answer

A)  sales order costs 
B)  customer visit costs 
C)  salary of the wholesale distribution channel manager 
D)  corporate adminstration costs 
A)  sales order costs 
B)  customer visit costs 
C)  salary of the wholesale distribution channel manager 
D)  corporate adminstration costs

Question 9

Managers who utilize customer profitability charts should drop customers that generate a negative customer operating income, since dropping an unprofitable customer will automatically cause overall income to increase.

Accepted Answer

A) True 
 B)False

Question 10

The static-budget variance will be favorable, when ________.

Accepted Answer

A)  budgeted unit sales are more than actual unit sales 
B)  the actual contribution margin is less than the static-budget contribution margin 
C)  the actual sales mix shifts toward the less profitable units 
D)  the flexible-budget and the sales-volume variance are favorable 
A)  budgeted unit sales are more than actual unit sales 
B)  the actual contribution margin is less than the static-budget contribution margin 
C)  the actual sales mix shifts toward the less profitable units 
D)  the flexible-budget and the sales-volume variance are favorable

Question 11

Superior Electronics manufactures TVs and DVDRs. During April, the following activities occurred:
   
Required:
Compute the following variances in terms of the contribution margin.
a.Determine the total sales-mix variance.
b.Determine the total sales-quantity variance.
c.Determine the total sales-volume variance.

Accepted Answer

The answer of Superior Electronics manufactures TVs and DVDRs. During...

Question 12

Which of the following is a reason to gather data, associate revenues with each customer and develop a system of allocating costs to each customer?

Accepted Answer

A)  GAAP requirements for external reporting including 10K disclosures 
B)  to assure that highly profitable customers get the appropriate level of care and attention 
C)  ABC systems cannot be implemented without customer-profitability reporting 
D)  to assure that more resources are committed to loss-making customers in an attempt to retain all customers 
A)  GAAP requirements for external reporting including 10K disclosures 
B)  to assure that highly profitable customers get the appropriate level of care and attention 
C)  ABC systems cannot be implemented without customer-profitability reporting 
D)  to assure that more resources are committed to loss-making customers in an attempt to retain all customers

Question 13

Dartmouth Building Products Inc. provides the following information.
Corporate advertising costs = $850,000
Division A - $5,000,000
Division B - $20,000,000
Number of ads run relevant on Division A products 500
Number of ads run relevant to Division B products 3667
Assume that customers with higher revenues benefited more from corporate advertising costs than customers with lower revenues. What is the allocated corporate costs for Division A?

Accepted Answer

A)  $748,000 
B)  $212,500 
C)  $170,000 
D)  $850,000 
A)  $748,000 
B)  $212,500 
C)  $170,000 
D)  $850,000

Question 14

The sales-mix variance is calculated by ________.

Accepted Answer

A)  deducting budgeted contribution margin based on actual units at budgeted mix from budgeted contribution margin based on actual units sold at the actual mix 
B)  deducting budgeted contribution margin based on budgeted units at actual mix from budgeted contribution margin based on actual units sold at the budgeted mix 
C)  deducting budgeted contribution margin based on actual units at actual mix from budgeted contribution margin based on budgeted units sold at the budgeted mix 
D)  deducting budgeted contribution margin based on actual units at actual mix from budgeted contribution margin based on actual units sold at the actual mix 
A)  deducting budgeted contribution margin based on actual units at budgeted mix from budgeted contribution margin based on actual units sold at the actual mix 
B)  deducting budgeted contribution margin based on budgeted units at actual mix from budgeted contribution margin based on actual units sold at the budgeted mix 
C)  deducting budgeted contribution margin based on actual units at actual mix from budgeted contribution margin based on budgeted units sold at the budgeted mix 
D)  deducting budgeted contribution margin based on actual units at actual mix from budgeted contribution margin based on actual units sold at the actual mix

Question 15

Market-share variance = $380,000 (U); Market-size variance = $250,000 (F); Sales-mix variance = $640,000 (F); calculate the sales-quantity variance.

Accepted Answer

A)  $380,000 (F) 
B)  $630,000 (F) 
C)  $10,000 (F) 
D)  $130,000 (U) 
A)  $380,000 (F) 
B)  $630,000 (F) 
C)  $10,000 (F) 
D)  $130,000 (U)

Question 16

The sales-quantity variance can be decomposed into ________.

Accepted Answer

A)  sales-mix variance and sales-volume variance 
B)  static-budget variance and flexible-budget variance 
C)  flexible-budget variance and sales-volume variance 
D)  market-share variance and market-size variance 
A)  sales-mix variance and sales-volume variance 
B)  static-budget variance and flexible-budget variance 
C)  flexible-budget variance and sales-volume variance 
D)  market-share variance and market-size variance

Question 17

Which of the following is true about discontinuing an unprofitable customer?

Accepted Answer

A)  will eliminate all corporate costs assigned to and may result in losing more revenues relative to costs saved 
B)  will eliminate all costs assigned to and may result in gaining more revenues relative to costs saved 
C)  will not eliminate all costs assigned to and may result in losing more revenues relative to costs saved 
D)  will not eliminate all corporate costs assigned to and may result in gaining more revenues relative to costs saved 
A)  will eliminate all corporate costs assigned to and may result in losing more revenues relative to costs saved 
B)  will eliminate all costs assigned to and may result in gaining more revenues relative to costs saved 
C)  will not eliminate all costs assigned to and may result in losing more revenues relative to costs saved 
D)  will not eliminate all corporate costs assigned to and may result in gaining more revenues relative to costs saved

Question 18

________ categorizes costs related to customers into different cost pools on the basis of either different classes of cost drivers or different degrees of difficulty in determining the cause-and-effect (or benefits-received) relationships.

Accepted Answer

A)  Customer-profitability analysis 
B)  Customer revenues 
C)  Customer cost hierarchy 
D)  Price discounting 
A)  Customer-profitability analysis 
B)  Customer revenues 
C)  Customer cost hierarchy 
D)  Price discounting

Question 19

Archoid's Flowering Plants provides the following information for the month of May:
 
For May, the company will report a(n) ________. (Round any intermediary calculations two decimal places.)

Accepted Answer

A)  favorable sales-mix variance 
B)  unfavorable sales-mix variance 
C)  favorable market-share variance 
D)  unfavorable market-share variance 
A)  favorable sales-mix variance 
B)  unfavorable sales-mix variance 
C)  favorable market-share variance 
D)  unfavorable market-share variance

Question 20

What actions might be taken with an unprofitable customer?

Accepted Answer

An unprofitable customer might be droppe

Exam 14: Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis

Salary of top management and general-administration costs is an example of which of the following?

Sales-mix variance = $300,000 (F), sales-quantity variance = $250,000 (F), flexible-budget variance = $120,000 (F), market-size variance = $80,000 (U), calculate the sales-volume variance.

More insight into the static-budget variance can be gained by subdividing it into ________.

When corporate-sustaining costs are fully allocated to distribution channels, then the sum of the operating income from each distribution-channel is ________.

Customers making large contributions to the profitability of the company should ________.

Consider revenues from three of Megafy's 10 wholesale customers in 2015: What conclusions can be drawn from the above data? What steps can the manager of the company take?

When the cost pools are homogeneous which of the following will be true?

A company has two distribution channels: wholesale and business sales. Which of the following costs would be allocated as distribution-channel-level costs when analyzing the profitability of customer distribution channels?

Managers who utilize customer profitability charts should drop customers that generate a negative customer operating income, since dropping an unprofitable customer will automatically cause overall income to increase.

The static-budget variance will be favorable, when ________.

Which of the following is a reason to gather data, associate revenues with each customer and develop a system of allocating costs to each customer?

The sales-mix variance is calculated by ________.

Market-share variance = $380,000 (U); Market-size variance = $250,000 (F); Sales-mix variance = $640,000 (F); calculate the sales-quantity variance.

The sales-quantity variance can be decomposed into ________.

Which of the following is true about discontinuing an unprofitable customer?

________ categorizes costs related to customers into different cost pools on the basis of either different classes of cost drivers or different degrees of difficulty in determining the cause-and-effect (or benefits-received) relationships.

Archoid's Flowering Plants provides the following information for the month of May: For May, the company will report a(n) ________. (Round any intermediary calculations two decimal places.)

What actions might be taken with an unprofitable customer?

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, Direct-Cost Variances, and Management Control

Flexible Budgets, Overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Allocation of Support-Department Costs, Common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, Rework, and Scrap

Balanced Scorecard: Quality and Time

Inventory Management, Just-in-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing, and Multinational Considerations

Performance Measurement, Compensation, and Multinational Considerations

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