Question 1

There are two elements that influence customer profitability revenues and costs.

Accepted Answer

A) True 
 B)False

Question 2

Price discounts are influenced by:

Accepted Answer

A) the volume of product purchased 
B) a desire to sell to a customer in an area with high-growth potential 
C) negotiating skills of the sales person 
D) All of these answers are correct. 
A) the volume of product purchased 
B) a desire to sell to a customer in an area with high-growth potential 
C) negotiating skills of the sales person 
D) All of these answers are correct.

Question 3

To manage setup costs, a corporation might focus on the:

Accepted Answer

A) number of setup-hours 
B) number of units included in each production run 
C) batch-level costs incurred per setup-hour 
D) Both A and C are correct. 
A) number of setup-hours 
B) number of units included in each production run 
C) batch-level costs incurred per setup-hour 
D) Both A and C are correct.

Question 4

The sales-quantity variance will be unfavorable when:

Accepted Answer

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

Question 5

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-volume variance in terms of the contribution margin?

Accepted Answer

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

Question 6

Answer the following questions using the information below:
Shaghai Tea Products has an exclusive contract with British Distributors. Calamine and Shanghai are two brands of teas that are imported and sold to retail outlets. The following information is provided for the month of March:
   Budgeted and actual fixed corporate-sustaining costs are $1,750 and $2,000, respectively.
-What is the actual contribution margin for the month?

Accepted Answer

A) $7,500 
B) $8,800 
C) $8,500 
D) $6,900 
A) $7,500 
B) $8,800 
C) $8,500 
D) $6,900

Question 7

To improve customer profitability, companies should:

Accepted Answer

A) strictly enforce their volume-based price discounting policy 
B) track discounts by customer 
C) track discounts by sales person 
D) Both B and C are correct. 
A) strictly enforce their volume-based price discounting policy 
B) track discounts by customer 
C) track discounts by sales person 
D) Both B and C are correct.

Question 8

Using the fairness criterion, the costs are allocated among the beneficiaries in proportion to the benefits each receives.

Accepted Answer

A) True 
 B)False

Question 9

Price discounts must be uniform among all customers.

Accepted Answer

A) True 
 B)False

Question 10

In general, distribution-channel costs are more easily influenced by customer actions than customer batch-level costs.

Accepted Answer

A) True 
 B)False

Question 11

Costs in a homogeneous cost pools have the same or a similar cause-and-effect or benefits-received relationship with the cost-allocation base.

Accepted Answer

A) True 
 B)False

Question 12

An unfavorable sales-mix variance would most likely be caused by:

Accepted Answer

A) a new competitor providing better service in the high-margin product sector 
B) a competitor having distribution problems with high-margin products 
C) the company offering low-margin products at a higher price 
D) the company experiencing quality-control problems that get negative media coverage of low-margin products 
A) a new competitor providing better service in the high-margin product sector 
B) a competitor having distribution problems with high-margin products 
C) the company offering low-margin products at a higher price 
D) the company experiencing quality-control problems that get negative media coverage of low-margin products

Question 13

The flexible-budget variance is the difference between an actual result and the flexible-budget amount based on the level of output actually achieved in the budget period.

Accepted Answer

A) True 
 B)False

Question 14

For each cost pool listed select an appropriate allocation base from the list below. An allocation base may be used only once. Assume a manufacturing company.
Allocation bases for which the information system can provide data:
1. Number of employees per department
2. Employee wages and salaries per department
3. Production facility square footage
4. Hours of operation of each production department
5. Machine hours by department
6. Operations costs of each department
7. Hours of computer use per month per department
8. Indirect labor-hours per department
Cost pools:

Accepted Answer

The answer of For each cost pool listed select an...

Question 15

If deciding whether to eliminate a distribution channel, allocating corporate-sustaining costs to distribution channels:

Accepted Answer

A) helps define cost reduction possibilities 
B) gives the misleading impression of potential cost savings 
C) identifies administrative inefficiencies 
D) evaluates the effectiveness of sales personnel 
A) helps define cost reduction possibilities 
B) gives the misleading impression of potential cost savings 
C) identifies administrative inefficiencies 
D) evaluates the effectiveness of sales personnel

Question 16

The three major corporate cost categories are treasury, human resource management, and corporate administration costs.

Accepted Answer

A) True 
 B)False

Question 17

Answer the following questions using the information below:
Shaghai Tea Products has an exclusive contract with British Distributors. Calamine and Shanghai are two brands of teas that are imported and sold to retail outlets. The following information is provided for the month of March:
   Budgeted and actual fixed corporate-sustaining costs are $1,750 and $2,000, respectively.
-For the contribution margin, what is the total flexible-budget variance?

Accepted Answer

A) $300 favorable 
B) $1,900 unfavorable 
C) $500 favorable 
D) $800 unfavorable 
A) $300 favorable 
B) $1,900 unfavorable 
C) $500 favorable 
D) $800 unfavorable

Question 18

An individual cost item can be simultaneously a direct cost of one cost object and an indirect cost of another cost object.

Accepted Answer

A) True 
 B)False

Question 19

Additional insight can be gained by dividing the sales-mix variance into the flexible-budget variance and the sales-volume variance.

Accepted Answer

A) True 
 B)False

Question 20

Other factors that managers should consider in deciding how to allocate resources among customers include:

Accepted Answer

A) likelihood of customer retention 
B) long-run customer profitability 
C) potential for sales growth 
D) All of these are correct. 
A) likelihood of customer retention 
B) long-run customer profitability 
C) potential for sales growth 
D) All of these are correct.

There are two elements that influence customer profitability revenues and costs.

Price discounts are influenced by:

To manage setup costs, a corporation might focus on the:

The sales-quantity variance will be unfavorable when:

To improve customer profitability, companies should:

Using the fairness criterion, the costs are allocated among the beneficiaries in proportion to the benefits each receives.

Price discounts must be uniform among all customers.

In general, distribution-channel costs are more easily influenced by customer actions than customer batch-level costs.

Costs in a homogeneous cost pools have the same or a similar cause-and-effect or benefits-received relationship with the cost-allocation base.

An unfavorable sales-mix variance would most likely be caused by:

The flexible-budget variance is the difference between an actual result and the flexible-budget amount based on the level of output actually achieved in the budget period.

If deciding whether to eliminate a distribution channel, allocating corporate-sustaining costs to distribution channels:

The three major corporate cost categories are treasury, human resource management, and corporate administration costs.

An individual cost item can be simultaneously a direct cost of one cost object and an indirect cost of another cost object.

Additional insight can be gained by dividing the sales-mix variance into the flexible-budget variance and the sales-volume variance.

Other factors that managers should consider in deciding how to allocate resources among customers include:

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

There are two elements that influence customer profitability revenues and costs.

Price discounts are influenced by:

To manage setup costs, a corporation might focus on the:

The sales-quantity variance will be unfavorable when:

To improve customer profitability, companies should:

Using the fairness criterion, the costs are allocated among the beneficiaries in proportion to the benefits each receives.

Price discounts must be uniform among all customers.

In general, distribution-channel costs are more easily influenced by customer actions than customer batch-level costs.

Costs in a homogeneous cost pools have the same or a similar cause-and-effect or benefits-received relationship with the cost-allocation base.

An unfavorable sales-mix variance would most likely be caused by:

The flexible-budget variance is the difference between an actual result and the flexible-budget amount based on the level of output actually achieved in the budget period.

If deciding whether to eliminate a distribution channel, allocating corporate-sustaining costs to distribution channels:

The three major corporate cost categories are treasury, human resource management, and corporate administration costs.

An individual cost item can be simultaneously a direct cost of one cost object and an indirect cost of another cost object.

Additional insight can be gained by dividing the sales-mix variance into the flexible-budget variance and the sales-volume variance.

Other factors that managers should consider in deciding how to allocate resources among customers include:

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