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

A customer cost hierarchy categorizes costs related to customers into different cost pools on the basis of using only one cost driver.

It is possible that the smallest customer in terms of revenue is the most profitable customer.

In analyzing customer-level indirect costs, which category of the customer-cost hierarchy would you NOT consider?

The sales-mix variance will be favorable when:

Customers making large contributions to the profitability of the company should:

Answer the following questions using the information below: The Hassan Corporation has an Electric Mixer Division and an Electric Lamp Division. Of a $10,000,000 bond issuance, the Electric Mixer Division used $7,000,000 and the Electric Lamp Division used $3,000,000 for expansion. Interest costs on the bond totaled $750,000 for the year. -What amount of interest costs should be allocated to the Electric Lamp Division?

Which cost-allocation criterion is most likely to subsidize poor performers at the expense of the best performers?

Customers are more valuable when they are all of the following EXCEPT:

Answer the following questions using the information below: The Hassan Corporation has an Electric Mixer Division and an Electric Lamp Division. Of a $10,000,000 bond issuance, the Electric Mixer Division used $7,000,000 and the Electric Lamp Division used $3,000,000 for expansion. Interest costs on the bond totaled $750,000 for the year. -The above interest costs would be considered a(n):

The formula (budgeted contribution margin based on actual units sold of all products at the budgeted mix)- (contribution margin in the static budget)which is based on budgeted units of all products to be sold at budgeted mix)is equal to the:

To guide cost allocation decisions, the cause-and-effect criterion:

Some companies only allocate corporate costs to divisions that are:

A challenge to using cost-benefit criteria for allocating costs is that:

Advances in information-gathering technology make it more likely that multiple cost-pool systems will pass the cost-benefit test.

Costs incurred to process orders would most likely be classified as a:

Corporate overhead costs can be allocated:

Which is the preferred allocation method for performance evaluation?

To more accurately assess customer profitability, corporate-sustaining costs should be allocated.

When using the cause-and-effect criterion, cost drivers are selected as the cost allocation bases.

To guide cost allocation decisions, the ability to bear criterion: