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

Synor Coffee,Inc.,sells two types of coffee,Colombian and Blue Mountain.The monthly budget for U.S.coffee sales is based on a combination of last year's performance,a forecast of industry sales,and the company's expected share of the U.S.market.The following information is provided for March: Actual budget Colombian Blue Mountain Colombian Blue Mountain Sales in pounds 15,000. 17,000. 13,500. 18,000 Price per pound \ 13.00 \ 16.00 \ 13.00 \ 16.00 Variable cost per pound Contribution margin \ 7.50 \ 7.50 \ 6.50 \ 8.00 Budgeted and actual fixed corporate-sustaining costs are $60,000 and $72,000,respectively. Required: a.Calculate the actual contribution margin for the month. b.Calculate the contribution margin for the static budget. c.Calculate the contribution margin for the flexible budget. d.Determine the total static-budget variance,the total flexible-budget variance,and the total sales-volume variance in terms of the contribution margin.

The ability-to-bear criterion is considered superior when the purpose of cost allocation is motivation.

Costs which are NOT economically feasible to trace but which are related to a cost object are known as ________.

Companies that only record the invoice price can usually track the magnitude of price discounting.

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

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. -What amount of interest costs should be allocated to the Electric Lamp Division?

A price discount is the reduction in selling price below list selling price to encourage customers to purchase more quantities.

To improve customer profitability,companies should track ________.

It is common to find that a small number of customers generate a high percentage of operating income.

The static-budget variance is the difference between ________.

Answer the following questions using the information below: Woodruff Flowering Plants provides the following information for the month of May: Actual Budget Fuchsia Dogwood Fuchsia Dogwood Sales in units 18,000 4,500 17,000 3,000 Contribution margin per unit \ 20 \ 17 \ 21 \ 16 -What is the budgeted contribution margin per composite unit for the budgeted mix?

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

The Octova Corporation manufactures two types of vacuum cleaners: the ZENITH for commercial building use and the House-Helper for residences.Budgeted and actual operating data for the year 20X5 are as follows: Static Budget ZENITH House-Helper Total Number sold 20,000 80,000 100,000 Contribution margin \ 4,600,000\ 15,200,000\ 19,800,000 Actual Results ZENITH House-Helper Total Number sold 21,500 60,000 81,500 Contribution margin \ 6,665,000 \ 13,200,000 \ 19,865,000 Required: a.Calculate the contribution margin for the flexible budget. b.Determine the total static-budget variance,the total flexible-budget variance,and the total sales-volume variance in terms of the contribution margin.

Costs incurred to handle each unit sold would most likely be classified as a ________.

Managers can gain more insight about the static-budget variance by subdividing it into the flexible-budget variance and the sales-volume variance.

The static-budget variance will be favorable,when ________.

Answer the following questions using the information below: The Fortise 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 2015 were as follows: Static Budget Victor House-Mate Total Number sold 6,000 24,000 30,000 Contribution margin \ 1,560,000 \ 3,120,000 \ 4,680,000 Actual Results Victor House-Mate Total Number sold 5,000 35,000 40,000 Contribution margin \ 1,400,000 \ 4,130,000 \ 5,530,000 -What is the total flexible-budget variance in terms of the contribution margin?

Answer the following questions using the information below: Archoid's Flowering Plants provides the following information for the month of May: Actual Budget Tulips Geraniums Tulips Geraniums Sales in units 4,420 4,080 4,950 3,300 Contribution margin per unit \ 12 \ 19 \ 11 \ 21 -What is the budgeted contribution margin per composite unit for the actual mix?

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.Number of sales orders 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.Number of units sold Cost pools: ___a. Vice President of Finance's office expenses ___b. Computer operations used in conjunction with manufacturing ___c. Personnel Department ___d. Sales-order costs ___e. Energy costs

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: Standard Super Bud geted sales in units 2,400 600 Bud geted selling price \ 600 \ 1,700 Bud geted contribution margin per unit \ 400 \ 1,050 Actual sales in units 2,800 1,200 Actual selling price \ 650 \ 1,680 -What is the total sales-volume variance in terms of the contribution margin?