Question 1

Customer revenues and ________ are the determinants of customer profitability

Accepted Answer

A) customer profile 
B) customer costs 
C) customer location 
D) customer industry 
A) customer profile 
B) customer costs 
C) customer location 
D) customer industry

Question 2

The most likely reason for NOT allocating corporate costs to divisions include that:

Accepted Answer

A) these costs are not controllable by division managers 
B) these costs are incurred to support division activities, not corporate activities 
C) division resources are already used to attain corporate goals 
D) divisions receive no benefits from corporate costs 
A) these costs are not controllable by division managers 
B) these costs are incurred to support division activities, not corporate activities 
C) division resources are already used to attain corporate goals 
D) divisions receive no benefits from corporate costs

Question 3

To allocate corporate costs to divisions, the allocation base used should:

Accepted Answer

A) be an output unit-level base 
B) have the best cause-and-effect relationship with the costs 
C) combine administrative costs and human resource management costs 
D) allocate the full costs 
A) be an output unit-level base 
B) have the best cause-and-effect relationship with the costs 
C) combine administrative costs and human resource management costs 
D) allocate the full costs

Question 4

Corporate administrative costs allocated to a division cost pool are most likely to be:

Accepted Answer

A) output unit-level costs 
B) facility-sustaining costs 
C) product-sustaining costs 
D) batch-level costs 
A) output unit-level costs 
B) facility-sustaining costs 
C) product-sustaining costs 
D) batch-level costs

Question 5

An favorable direct materials mix variance results when more expensive direct materials are substituted for less expensive direct materials.

Accepted Answer

A) True 
 B)False

Question 6

The direct materials mix variance will be favorable when:

Accepted Answer

A) the flexible-budget contribution margin is greater than the actual contribution margin 
B) the actual direct materials input mix is less expensive than the budgeted direct materials input mix 
C) the actual quantity of total inputs used is greater than the flexible budget for total inputs 
D) actual unit sales are less than budgeted unit sales 
A) the flexible-budget contribution margin is greater than the actual contribution margin 
B) the actual direct materials input mix is less expensive than the budgeted direct materials input mix 
C) the actual quantity of total inputs used is greater than the flexible budget for total inputs 
D) actual unit sales are less than budgeted unit sales

Question 7

The sales-quantity variance is favorable when budgeted unit sales exceed actual unit sales.

Accepted Answer

A) True 
 B)False

Question 8

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-mix variance in terms of the contribution margin?

Accepted Answer

A) $200,000 unfavorable 
B) $360,000 unfavorable 
C) $900,000 favorable 
D) $1,260,000 favorable 
A) $200,000 unfavorable 
B) $360,000 unfavorable 
C) $900,000 favorable 
D) $1,260,000 favorable

Question 9

The cost of the manager of a retail distribution channel would most likely be classified as a:

Accepted Answer

A) customer-sustaining cost 
B) distribution-channel cost 
C) customer batch-level cost 
D) corporate-sustaining cost 
A) customer-sustaining cost 
B) distribution-channel cost 
C) customer batch-level cost 
D) corporate-sustaining cost

Question 10

The greater the degree of homogeneity, the:

Accepted Answer

A) greater the number of needed cost pools 
B) fewer the number of needed cost pools 
C) less accurate the costs of a particular cost object 
D) greater the variety of cause-and-effect relationships with the cost driver 
A) greater the number of needed cost pools 
B) fewer the number of needed cost pools 
C) less accurate the costs of a particular cost object 
D) greater the variety of cause-and-effect relationships with the cost driver

Question 11

The sales-mix variance results from a difference between the:

Accepted Answer

A) actual market share and the budgeted market share 
B) actual contribution margin and the budgeted contribution margin 
C) budgeted contribution margin per composite unit for the actual mix and the budgeted contribution margin per composite unit for the budgeted mix 
D) actual market size in units and the budgeted market size in units 
A) actual market share and the budgeted market share 
B) actual contribution margin and the budgeted contribution margin 
C) budgeted contribution margin per composite unit for the actual mix and the budgeted contribution margin per composite unit for the budgeted mix 
D) actual market size in units and the budgeted market size in units

Question 12

Dropping an unprofitable customer will:

Accepted Answer

A) eliminate long-run costs assigned to that customer 
B) eliminate most short-run costs assigned to that customer 
C) decrease long-run profitability 
D) increase the potential to cross-sell other products that are more desirable 
A) eliminate long-run costs assigned to that customer 
B) eliminate most short-run costs assigned to that customer 
C) decrease long-run profitability 
D) increase the potential to cross-sell other products that are more desirable

Question 13

For each item listed select the appropriate purpose of cost allocation from the list below. A purpose may be used more than once.
1. To cost a product at a fair price for government contracts
2. To encourage simpler product design
3. To decide on an appropriate selling price for a special-order product
4. To cost inventories for reporting on a company's tax return
5. To encourage the sales department to focus on high-margin products
6. To evaluate a make or buy decision
7. To cost inventories for the balance sheet
8. To decide whether to add or delete a product line
Purposes of cost allocation:
a. To provide information for economic decisions
b. To motivate managers and other employees
c. To justify costs or compute reimbursement amounts
d. To measure income and assets

Accepted Answer

1. c
2. b

Question 14

Identifying homogeneous cost pools:

Accepted Answer

A) requires judgment and should be reevaluated on a regular basis 
B) should include the input of management 
C) should include a cost-benefit analysis 
D) All of these answers are correct. 
A) requires judgment and should be reevaluated on a regular basis 
B) should include the input of management 
C) should include a cost-benefit analysis 
D) All of these answers are correct.

Question 15

The sales-mix variance will be unfavorable when:

Accepted Answer

A) the actual sales mix shifts toward the less profitable units 
B) the composite unit for the actual mix is greater than for the budgeted mix 
C) actual unit sales are less than budgeted unit sales 
D) the actual contribution margin is greater than the static-budget contribution margin 
A) the actual sales mix shifts toward the less profitable units 
B) the composite unit for the actual mix is greater than for the budgeted mix 
C) actual unit sales are less than budgeted unit sales 
D) the actual contribution margin is greater than the static-budget contribution margin

Question 16

A customer cost hierarchy may include distribution-channel costs.

Accepted Answer

A) True 
 B)False

Question 17

R&D costs are used for which purpose of cost allocation?

Accepted Answer

A) to provide information for economic decisions 
B) to report to external parties when using generally accepted accounting principles 
C) to calculate costs of a government contract 
D) All of these answers are correct. 
A) to provide information for economic decisions 
B) to report to external parties when using generally accepted accounting principles 
C) to calculate costs of a government contract 
D) All of these answers are correct.

Question 18

The higher the likely growth of the customer's industry and the customer's sales, the more valuable the customer.

Accepted Answer

A) True 
 B)False

Question 19

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-mix variance in terms of the contribution margin?

Accepted Answer

A) $220,000 favorable 
B) $340,000 favorable 
C) $556,000 favorable 
D) $896,000 favorable 
A) $220,000 favorable 
B) $340,000 favorable 
C) $556,000 favorable 
D) $896,000 favorable

Question 20

Customer-profitability analysis is the reporting and assessment of revenues earned from customers and the costs incurred to earn those revenues.

Accepted Answer

A) True 
 B)False

Customer revenues and ________ are the determinants of customer profitability

The most likely reason for NOT allocating corporate costs to divisions include that:

To allocate corporate costs to divisions, the allocation base used should:

Corporate administrative costs allocated to a division cost pool are most likely to be:

An favorable direct materials mix variance results when more expensive direct materials are substituted for less expensive direct materials.

The direct materials mix variance will be favorable when:

The sales-quantity variance is favorable when budgeted unit sales exceed actual unit sales.

The cost of the manager of a retail distribution channel would most likely be classified as a:

The greater the degree of homogeneity, the:

The sales-mix variance results from a difference between the:

Dropping an unprofitable customer will:

Identifying homogeneous cost pools:

The sales-mix variance will be unfavorable when:

A customer cost hierarchy may include distribution-channel costs.

R&D costs are used for which purpose of cost allocation?

The higher the likely growth of the customer's industry and the customer's sales, the more valuable the customer.

Customer-profitability analysis is the reporting and assessment of revenues earned from customers and the costs incurred to earn those revenues.

The Accountants Role in the Organization

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

Pricing Decisions and Cost Management

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

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

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, Rework, and Scrap

Balanced Scorecard: Quality, Time, and the Theory of Constraints

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

Filters

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

Customer revenues and ________ are the determinants of customer profitability

The most likely reason for NOT allocating corporate costs to divisions include that:

To allocate corporate costs to divisions, the allocation base used should:

Corporate administrative costs allocated to a division cost pool are most likely to be:

An favorable direct materials mix variance results when more expensive direct materials are substituted for less expensive direct materials.

The direct materials mix variance will be favorable when:

The sales-quantity variance is favorable when budgeted unit sales exceed actual unit sales.

The cost of the manager of a retail distribution channel would most likely be classified as a:

The greater the degree of homogeneity, the:

The sales-mix variance results from a difference between the:

Dropping an unprofitable customer will:

Identifying homogeneous cost pools:

The sales-mix variance will be unfavorable when:

A customer cost hierarchy may include distribution-channel costs.

R&D costs are used for which purpose of cost allocation?

The higher the likely growth of the customer's industry and the customer's sales, the more valuable the customer.

Customer-profitability analysis is the reporting and assessment of revenues earned from customers and the costs incurred to earn those revenues.

The Accountants Role in the Organization

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

Pricing Decisions and Cost Management

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

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

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, Rework, and Scrap

Balanced Scorecard: Quality, Time, and the Theory of Constraints

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

Filters