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 different:

Answer the following questions using the information below: The XTRA Appliance Manufacturing Corporation manufactures two vacuum cleaners, the Standard and the Super. The following information was gathered about the two products: -What is the total sales-volume variance in terms of the contribution margin?

The static-budget variance is the difference between an actual result and a budgeted amount in the static budget.

________ 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.

The sales quantity variance is the difference between budgeted contribution margin based on actual units sold of all products at the budgeted mix, and contribution margin in the flexible budget.

A shift towards a mix of products with a lower contribution margin per unit will most likely result in a(n):

Answer the following questions using the information below: The Sarasota Corporation manufactures two types of vacuum cleaners, the Victor for commercial building use and the House-Mate for residences. Budgeted and actual operating data for the year 2012 were as follows: -What is the total sales-quantity variance in terms of the contribution margin?

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. -Which corporate costs should be allocated to divisions?

Which item is NOT a category in the customer cost hierarchy?

Price discounts should NEVER be viewed as:

An activity-based costing system may focus on customers rather than products.

Companies that want to calculate the full cost of products must allocate all corporate costs to indirect-cost pools of divisions.

To allocate a cost, it is only necessary to satisfy one of the purposes for which costs are allocated.

When there is a lesser degree of homogeneity, fewer cost pools are required to accurately explain the use of company resources.

To motivate engineers to design simpler products, costs for production, distribution, and customer service may be included in product-cost estimates.

The sales-quantity variance results from a difference between:

To improve customer profitability, companies should track:

All of the following illustrate purposes for allocating costs to cost objects EXCEPT to:

Once a cost pool has been established, it should NOT need to be revisited or revised.

Richard's 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.