Question 1

Which of the following is a corporate-sustaining cost?

Accepted Answer

A)  design costs 
B)  corporate brand advertising 
C)  shipment costs 
D)  research and development costs 
A)  design costs 
B)  corporate brand advertising 
C)  shipment costs 
D)  research and development costs

Question 2

More insight into the sales-volume variance can be gained by subdividing it into ________.

Accepted Answer

A)  the sales-mix variance and the sales-quantity variance 
B)  the market-share variance and the sales-mix variance 
C)  the flexible-budget variance and the market-size variance 
D)  the flexible-budget variance and the sales-mix variance 
A)  the sales-mix variance and the sales-quantity variance 
B)  the market-share variance and the sales-mix variance 
C)  the flexible-budget variance and the market-size variance 
D)  the flexible-budget variance and the sales-mix variance

Question 3

When the purpose of cost allocation is to provide information for economic decisions or to motivate managers and employees,the best criteria are ________.

Accepted Answer

A)  the cause-and-effect and the ability-to bear criteria 
B)  the cause-and-effect and the benefits-received criteria 
C)  the benefits-received and the fairness criteria 
D)  the fairness and the ability-to-bear criteria 
A)  the cause-and-effect and the ability-to bear criteria 
B)  the cause-and-effect and the benefits-received criteria 
C)  the benefits-received and the fairness criteria 
D)  the fairness and the ability-to-bear criteria

Question 4

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 Mixer Division?

Accepted Answer

A)  $292,500 
B)  $682,500 
C)  $9,100,000 
D)  $2,730,000 
A)  $292,500 
B)  $682,500 
C)  $9,100,000 
D)  $2,730,000

Question 5

Which of the following is an example of division-sustaining costs?

Accepted Answer

A)  research and development cost 
B)  corporate administration costs 
C)  corporate brand advertising 
D)  shipment costs 
A)  research and development cost 
B)  corporate administration costs 
C)  corporate brand advertising 
D)  shipment costs

Question 6

When the cost pools are homogeneous ________.

Accepted Answer

A)  the number of needed cost pools will be more 
B)  the costs in the cost pool have a similar cause-and-effect or benefits-received relationship with the cost-allocation base 
C)  managers should not allocate both variable costs and costs that are fixed in the short-run 
D)  there will be a greater variety of cause-and-effect, benefits-received, or fair-and-equitable relationship with the cost-allocation base 
A)  the number of needed cost pools will be more 
B)  the costs in the cost pool have a similar cause-and-effect or benefits-received relationship with the cost-allocation base 
C)  managers should not allocate both variable costs and costs that are fixed in the short-run 
D)  there will be a greater variety of cause-and-effect, benefits-received, or fair-and-equitable relationship with the cost-allocation base

Question 7

The benefits of implementing a more-complex cost allocation system are relatively easy to quantify for application of the cost-benefit approach.

Accepted Answer

A) True 
 B)False

Question 8

Price discounts must be uniform among all customers.

Accepted Answer

A) True 
 B)False

Question 9

Why would a manager perform customer-profitability analysis?

Accepted Answer

Customer profitability analysis highligh

Question 10

The market-share variance is the difference in actual contribution margin for actual market size in units caused solely by actual market share being different from budgeted market share.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following criteria has the presumption that the more-profitable divisions have a greater ability to absorb corporate administration costs?

Accepted Answer

A)  the fairness or equity criterion 
B)  the ability to bear criterion 
C)  the cause-and-effect criterion 
D)  the benefits-received criterion 
A)  the fairness or equity criterion 
B)  the ability to bear criterion 
C)  the cause-and-effect criterion 
D)  the benefits-received criterion

Question 12

Bar charts and a whale curve are some of the common ways of displaying the results of customer-profitability analysis.

Accepted Answer

A) True 
 B)False

Question 13

The sales-mix variance can be explained in terms of the budgeted contribution margin per composite unit of the sales mix.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

Allocation of corporate-sustaining costs is useful for ________.

Accepted Answer

A)  evaluating the performance of salespersons with individual customer accounts 
B)  motivating distribution-channel management 
C)  focusing on the cause-and-effect relationships with the cost-allocation bases 
D)  motivating division managers to examine how corporate costs are planned and controlled 
A)  evaluating the performance of salespersons with individual customer accounts 
B)  motivating distribution-channel management 
C)  focusing on the cause-and-effect relationships with the cost-allocation bases 
D)  motivating division managers to examine how corporate costs are planned and controlled

Question 16

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.

Accepted Answer

A) True 
 B)False

Question 17

The sales-quantity variance will be unfavorable when ________.

Accepted Answer

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

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

Which purpose of cost allocation is used to encourage sales representatives to push high-margin products or services?

Accepted Answer

A)  to provide information for economic decisions 
B)  to motivate managers and other employees 
C)  to justify costs or compute reimbursement 
D)  to measure income and assets for reporting to external parties 
A)  to provide information for economic decisions 
B)  to motivate managers and other employees 
C)  to justify costs or compute reimbursement 
D)  to measure income and assets for reporting to external parties

Question 20

How can a company's revenues and costs differ across customers?

Accepted Answer

Revenues differ because of differences i

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

Which of the following is a corporate-sustaining cost?

More insight into the sales-volume variance can be gained by subdividing it into ________.

When the purpose of cost allocation is to provide information for economic decisions or to motivate managers and employees,the best criteria are ________.

Which of the following is an example of division-sustaining costs?

When the cost pools are homogeneous ________.

The benefits of implementing a more-complex cost allocation system are relatively easy to quantify for application of the cost-benefit approach.

Price discounts must be uniform among all customers.

Why would a manager perform customer-profitability analysis?

The market-share variance is the difference in actual contribution margin for actual market size in units caused solely by actual market share being different from budgeted market share.

Which of the following criteria has the presumption that the more-profitable divisions have a greater ability to absorb corporate administration costs?

Bar charts and a whale curve are some of the common ways of displaying the results of customer-profitability analysis.

The sales-mix variance can be explained in terms of the budgeted contribution margin per composite unit of the sales mix.

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

Allocation of corporate-sustaining costs is useful for ________.

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.

The sales-quantity variance will be unfavorable when ________.

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

Which purpose of cost allocation is used to encourage sales representatives to push high-margin products or services?

How can a company's revenues and costs differ across customers?

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

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