Question 1

NOT allocating some corporate costs to divisions and products results in ________.

Accepted Answer

A)  an increase in overall corporate profitability 
B)  the sum of individual product profitability being less than overall company profitability 
C)  the sum of individual product profitability being greater than overall company profitability 
D)  a decrease in overall corporate profitability 
A)  an increase in overall corporate profitability 
B)  the sum of individual product profitability being less than overall company profitability 
C)  the sum of individual product profitability being greater than overall company profitability 
D)  a decrease in overall corporate profitability C

Question 2

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 B

Question 3

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

Accepted Answer

A) True 
 B)False  True

Question 4

Sales-mix variance = $300,000 (F),sales-quantity variance = $200,000(F),flexible-budget variance = $100,000(F),market-size variance = $50,000(U),calculate the sales-volume variance.

Accepted Answer

A)  $650,000 (F) 
B)  $450,000 (F) 
C)  $550,000 (F) 
D)  $500,000 (F) 
A)  $650,000 (F) 
B)  $450,000 (F) 
C)  $550,000 (F) 
D)  $500,000 (F)

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

Answer the following questions using the information below:
The Conity Corporation has an Electric Mixer Division and an Electric Lamp Division. Of a $13,000,000 bond issuance, the Electric Mixer Division used $9,100,000 and the Electric Lamp Division used $3,900,000 for expansion. Interest costs on the bond totaled $975,000 for the year.
-The above interest costs would be considered a(n)________.

Accepted Answer

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

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

Explain the importance of customer-profitability analysis.

Accepted Answer

Customer-profitability analysis is the r

Question 10

Answer the following questions using the information below:
Capity Tea Products has an exclusive contract with British Distributors. Calamine and Capity are two brands of teas that are imported and sold to retail outlets. The following information is provided for the month of March:
 $\begin{array}{lrrrr} &\text { Actual }&&\text { Budget }\
& \text { Calamine } & \text { Capity } & \text { Calamine } & \text { Capity } \
\text { Sales in pounds } & 3,740 \mathrm{lbs} . & 3,960 \mathrm{lbs} . & 4,400 \mathrm{lbs} . & 3,300 \mathrm{lbs} \
\text { Price per pound } & \$ 2.80 & \$ 2.80 & \$ 2.00 & \$ 3.00 \
\text { Variable cost per pound } & 1.00 & 2.00 & 1.00 & 1.50 \
\text { Contribution margin } & \$ 1.80 & \$ 0.80 & \$ 1.00 & \$ 1.50
\end{array}$ Budgeted and actual fixed corporate-sustaining costs are $1,850 and $2,300, respectively.
-What is the actual contribution margin for the month?

Accepted Answer

A)  $9,680 
B)  $9,350 
C)  $10,560 
D)  $9,900 
A)  $9,680 
B)  $9,350 
C)  $10,560 
D)  $9,900

Question 11

The sales-quantity variance is calculated by ________.

Accepted Answer

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

Question 12

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 13

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

Accepted Answer

A)  unfavorable sales-mix variance 
B)  unfavorable sales-quantity variance 
C)  favorable sales-mix variance 
D)  favorable sales-quantity variance 
A)  unfavorable sales-mix variance 
B)  unfavorable sales-quantity variance 
C)  favorable sales-mix variance 
D)  favorable sales-quantity variance

Question 14

Costs in the cost pool having the same or a similar cause-and-effect or benefits-receiving relationship with the cost-allocation base can be achieved in adopting ________.

Accepted Answer

A)  indirect cost pools 
B)  homogeneous cost pools 
C)  hetrogeneous cost pools 
D)  direct cost pools 
A)  indirect cost pools 
B)  homogeneous cost pools 
C)  hetrogeneous cost pools 
D)  direct cost pools

Question 15

To analyze customer profitability,corporate-sustaining costs should be allocated to customers.

Accepted Answer

A) True 
 B)False

Question 16

Answer the following questions using the information below:
The Corata Appliance Manufacturing Corporation manufactures two vacuum cleaners, the Standard and the Super. The following information was gathered about the two products:
 $\begin{array}{lrr}&\text { Standard }&\text { Super }\
\text { Bud geted sales in units } & 2,400 & 600 \
\text { Bud geted selling price } & \$ 600 & \$ 1,700 \
\text { Bud geted contribution margin per unit } & \$ 400 & \$ 1,050 \
\text { Actual sales in units } & 2,800 & 1,200 \
\text { Actual selling price } & \$ 650 & \$ 1,680
\end{array}$
-What is the total sales-quantity variance in terms of the contribution margin?

Accepted Answer

A)  $260,000 favorable 
B)  $790,000 favorable 
C)  $530,000 favorable 
D)  $290,000 favorable 
A)  $260,000 favorable 
B)  $790,000 favorable 
C)  $530,000 favorable 
D)  $290,000 favorable

Question 17

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 18

What are the two components of the sales-quantity variance?

Accepted Answer

The two components of the the sales-quan

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

Should a company allocate its corporate costs to divisions?

Accepted Answer

Some companies allocate all corporate co

NOT allocating some corporate costs to divisions and products results in ________.

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

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

Sales-mix variance = $300,000 (F),sales-quantity variance = $200,000(F),flexible-budget variance = $100,000(F),market-size variance = $50,000(U),calculate the sales-volume variance.

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

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

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

Explain the importance of customer-profitability analysis.

The sales-quantity variance is calculated by ________.

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

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

Costs in the cost pool having the same or a similar cause-and-effect or benefits-receiving relationship with the cost-allocation base can be achieved in adopting ________.

To analyze customer profitability,corporate-sustaining costs should be allocated to customers.

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

What are the two components of the sales-quantity variance?

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

Should a company allocate its corporate costs to divisions?

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

Filters

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

NOT allocating some corporate costs to divisions and products results in ________.

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

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

Sales-mix variance = $300,000 (F),sales-quantity variance = $200,000(F),flexible-budget variance = $100,000(F),market-size variance = $50,000(U),calculate the sales-volume variance.

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

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

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

Explain the importance of customer-profitability analysis.

The sales-quantity variance is calculated by ________.

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

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

Costs in the cost pool having the same or a similar cause-and-effect or benefits-receiving relationship with the cost-allocation base can be achieved in adopting ________.

To analyze customer profitability,corporate-sustaining costs should be allocated to customers.

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

What are the two components of the sales-quantity variance?

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

Should a company allocate its corporate costs to divisions?

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

Filters