Question 1

A composite unit is a hypothetical unit with weights based on the mix of individual units.

Accepted Answer

A) True 
 B)False

Question 2

Consider revenues from three of Megafy's 10 wholesale customers in 2015:
 $$\begin{array} { | l | c | c | c | } 
\hline & \text { Customer } & \text { Customer } & \text { Customer } \
\hline & \text { A } & \text { B } & \text { C } \
\hline \text { Units sold } & 20,000 & 15000 & 3000 \
\hline \begin{array} { l } 
\text { List selling } \
\text { price }
\end{array} & \$ 500 & \$ 500 & \$ 500\
\hline \text { Price discount } & \$ 50 & \$ 30 &\$ 100  \
\hline \text { Invoice price } & \$ 450 & \$ 470 & \$ 400 \
\hline \text { Revenues } & \$ \mathbf { 9 , 0 0 0 , 0 0 0 } & \$ 7,050,000 & \$ \mathbf { 1 , 2 0 0 , 0 0 0 } \
\hline
\end{array}$$ What conclusion can be drawn from the above data? Which steps the manager of the company can take?

Accepted Answer

The company managers may decide to stric

Question 3

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:
 $$\begin{array}{l}
\begin{array} { l r r r } 
\text { Static Budget } & \text { Victor } & \text { House-Mate } & \text { Total } \
\hline \text { Number sold } & 6,000 & 24,000 & 30,000\
\text { Contribution margin } &\$ 1,560,000 & \$ 3,120,000 &\$ 4,680,000\\
\text { Actual Results } & \text { Victor } & \text { House-Mate } & \text { Total } \
\text { Number sold } & 5,000 & 35,000 & 40,000 \
\text { Contribution margin } & \$ 1,400,000 & \$ 4,130,000 & \$ 5,530,000
\end{array}
\end{array}$$
-What is the contribution margin for the flexible budget?

Accepted Answer

A)  $1,250,000 
B)  $4,200,000 
C)  $5,250,000 
D)  $5,850,000 
A)  $1,250,000 
B)  $4,200,000 
C)  $5,250,000 
D)  $5,850,000

Question 4

The cost of visiting customers would most likely be classified as a ________.

Accepted Answer

A)  customer output unit-level cost 
B)  customer batch-level cost 
C)  customer-sustaining cost 
D)  corporate-sustaining cost 
A)  customer output unit-level cost 
B)  customer batch-level cost 
C)  customer-sustaining cost 
D)  corporate-sustaining cost

Question 5

The Chair Company manufactures two modular types of chairs: one for the residential market,and the other for the office market.Budgeted and actual operating data for the year 2015 are:
 $$\begin{array}{l}
\begin{array} { l r r r } 
\text { Static Budget } & \text { Residential } & \text { Office } & \text { Total } \
\hline \text { Number of chairs sold } & 260,000 & 140,000 & 400,000 \
\text { Contribution margin } & \$ 26,000,000 & \$ 11,200,000 & \$ 37,200,000
\end{array}\\
\begin{array} { l r r r } 
\text { Actual Results } & \text { Residential } & \text { Office } & \text { Total } \
\hline \text { Number of chairs sold } & 248,400 & 165,600 & 414,000 \
\text { Contribution margin } & \$ 22,356,000 & \$ 13,248,000 & \$ 35,604,000
\end{array}
\end{array}$$ Required:
Compute the following variances in terms of contribution margin:
a.Compute the total static-budget variance,the total flexible-budget variance,and the total sales-volume variance.
b.Compute the sale-mix variance and the sales-quantity variance by type of chair,and in total.

Accepted Answer

The answer of The Chair Company manufactures two modular types...

Question 6

Answer the following questions using the information below:
Woodruff Flowering Plants provides the following information for the month of May:
 $\begin{array}{lrrrr}&\text { Actual }&&\text { Budget }\
&\text { Fuchsia}&\text { Dogwood }&\text { Fuchsia}&\text { Dogwood }\
\text { Sales in units } & 18,000 & 4,500 & 17,000 & 3,000 \
\text { Contribution margin per unit } & \$ 20 & \$ 17 & \$ 21 & \$ 16
\end{array}$
-For May,Woodruff will report a(n)________.

Accepted Answer

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

Question 7

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 8

Animer Inc. provides the following information.
Corporate advertising costs = $800,000
Division A - $4,500,000
Division B - $7,500,000
Assume that customers with higher revenues benefited more from corporate advertising costs than customers with lower revenues.
-What is the allocated corporate costs for Division B?

Accepted Answer

A)  $700,000 
B)  $200,000 
C)  $500,000 
D)  $300,000 
A)  $700,000 
B)  $200,000 
C)  $500,000 
D)  $300,000

Question 9

To guide cost allocation decisions,the benefits-received criterion ________.

Accepted Answer

A)  generally uses the cost driver as the cost allocation base 
B)  advocates allocating costs in proportion to the cost object's ability to bear costs allocated to it 
C)  is the primarily used criterion in activity-based costing 
D)  may use an allocation base of division revenues to allocate advertising costs 
A)  generally uses the cost driver as the cost allocation base 
B)  advocates allocating costs in proportion to the cost object's ability to bear costs allocated to it 
C)  is the primarily used criterion in activity-based costing 
D)  may use an allocation base of division revenues to allocate advertising costs

Question 10

In cost allocation,R&D costs are used ________.

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)  to calculate prime cost of a product 
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)  to calculate prime cost of a product

Question 11

An advantage of using a bar chart to visualize customer profitability is that ________.

Accepted Answer

A)  differences in commissions paid to sales persons stand out 
B)  the number of "unprofitable" customers stand out 
C)  trends in the volume of purchases become apparent 
D)  company can get ideas about new products or improved methods 
A)  differences in commissions paid to sales persons stand out 
B)  the number of "unprofitable" customers stand out 
C)  trends in the volume of purchases become apparent 
D)  company can get ideas about new products or improved methods

Question 12

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:
 $$\begin{array}{l}
\begin{array} { l r r r } 
\text { Static Budget } & \text { Victor } & \text { House-Mate } & \text { Total } \
\hline \text { Number sold } & 6,000 & 24,000 & 30,000\
\text { Contribution margin } &\$ 1,560,000 & \$ 3,120,000 &\$ 4,680,000\\
\text { Actual Results } & \text { Victor } & \text { House-Mate } & \text { Total } \
\text { Number sold } & 5,000 & 35,000 & 40,000 \
\text { Contribution margin } & \$ 1,400,000 & \$ 4,130,000 & \$ 5,530,000
\end{array}
\end{array}$$
-What is the total sales-volume variance in terms of the contribution margin?

Accepted Answer

A)  $1,170,000 favorable 
B)  $1,260,000 favorable 
C)  $850,000 unfavorable 
D)  $320,000 unfavorable 
A)  $1,170,000 favorable 
B)  $1,260,000 favorable 
C)  $850,000 unfavorable 
D)  $320,000 unfavorable

Question 13

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:
 $$\begin{array}{l}
\begin{array} { l r r r } 
\text { Static Budget } & \text { Victor } & \text { House-Mate } & \text { Total } \
\hline \text { Number sold } & 6,000 & 24,000 & 30,000\
\text { Contribution margin } &\$ 1,560,000 & \$ 3,120,000 &\$ 4,680,000\\
\text { Actual Results } & \text { Victor } & \text { House-Mate } & \text { Total } \
\text { Number sold } & 5,000 & 35,000 & 40,000 \
\text { Contribution margin } & \$ 1,400,000 & \$ 4,130,000 & \$ 5,530,000
\end{array}
\end{array}$$
-What is the total sales-mix variance in terms of the contribution margin?

Accepted Answer

A)  $200,000 unfavorable 
B)  $390,000 unfavorable 
C)  $900,000 favorable 
D)  $1,260,000 favorable 
A)  $200,000 unfavorable 
B)  $390,000 unfavorable 
C)  $900,000 favorable 
D)  $1,260,000 favorable

Question 14

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 15

To guide cost allocation decisions,the cause-and-effect criterion ________.

Accepted Answer

A)  is used less frequently than the other criteria 
B)  is the primary criterion used in activity-based costing 
C)  considers fairness as a matter of judgment rather than an operational criterion 
D)  advocates allocating costs in proportion to the cost object's ability to bear costs allocated to it 
A)  is used less frequently than the other criteria 
B)  is the primary criterion used in activity-based costing 
C)  considers fairness as a matter of judgment rather than an operational criterion 
D)  advocates allocating costs in proportion to the cost object's ability to bear costs allocated to it

Question 16

Which corporate costs should be allocated to divisions?

Accepted Answer

A)  costs incurred to process orders 
B)  cost related to homogeneous cost pools only 
C)  product-handling costs 
D)  both fixed and variable costs 
A)  costs incurred to process orders 
B)  cost related to homogeneous cost pools only 
C)  product-handling costs 
D)  both fixed and variable costs

Question 17

There is a direct cause-and effect relationship between division-sustaining costs and customer or sales manager's actions.

Accepted Answer

A) True 
 B)False

Question 18

The sales-quantity variance can be decomposed into ________.

Accepted Answer

A)  sales-mix variance and sales-volume variance 
B)  static-budget variance and flexible-budget variance 
C)  flexible-budget variance and sales-volume variance 
D)  market-share variance and market-size variance 
A)  sales-mix variance and sales-volume variance 
B)  static-budget variance and flexible-budget variance 
C)  flexible-budget variance and sales-volume variance 
D)  market-share variance and market-size variance

Question 19

More insight into the static-budget 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 market-size variance 
C)  the flexible-budget variance and the sales-volume 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 market-size variance 
C)  the flexible-budget variance and the sales-volume variance 
D)  the flexible-budget variance and the sales-mix variance

Question 20

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

Accepted Answer

A)  $19.00 
B)  $20.30 
C)  $19.40 
D)  $20.00 
A)  $19.00 
B)  $20.30 
C)  $19.40 
D)  $20.00

A composite unit is a hypothetical unit with weights based on the mix of individual units.

The cost of visiting customers would most likely be classified as a ________.

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

To guide cost allocation decisions,the benefits-received criterion ________.

In cost allocation,R&D costs are used ________.

An advantage of using a bar chart to visualize customer profitability is that ________.

Dropping an unprofitable customer will ________.

To guide cost allocation decisions,the cause-and-effect criterion ________.

Which corporate costs should be allocated to divisions?

There is a direct cause-and effect relationship between division-sustaining costs and customer or sales manager's actions.

The sales-quantity variance can be decomposed into ________.

More insight into the static-budget variance can be gained by subdividing it into ________.

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

A composite unit is a hypothetical unit with weights based on the mix of individual units.

The cost of visiting customers would most likely be classified as a ________.

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

To guide cost allocation decisions,the benefits-received criterion ________.

In cost allocation,R&D costs are used ________.

An advantage of using a bar chart to visualize customer profitability is that ________.

Dropping an unprofitable customer will ________.

To guide cost allocation decisions,the cause-and-effect criterion ________.

Which corporate costs should be allocated to divisions?

There is a direct cause-and effect relationship between division-sustaining costs and customer or sales manager's actions.

The sales-quantity variance can be decomposed into ________.

More insight into the static-budget variance can be gained by subdividing it into ________.

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