CH 14
A shift towards a higher proportion of sales of products with a lower contribution margin per unit will most likely result in a(n) ________. A) unfavorable sales-mix variance B) unfavorable sales-quantity variance C) favorable sales-mix variance D) favorable sales-quantity variance
A
An unfavorable sales-mix variance would most likely be caused by which of the following? 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
Archoid's Flowering Plants provides the following information for the month of May: Actual Budget Tulips Geraniums Tulips Geraniums Sales in units 4600 4500 4,950 3,300 Contribution margin per unit $12 $19 $11 $23 For May, the company will report a(n) ________. (Round any intermediary calculations two decimal places.) A) favorable sales-mix variance B) unfavorable sales-mix variance C) favorable market-share variance D) unfavorable market-share variance
A
Flexible-budget variance = $260,000 (F); sales-volume variance = $350,000 (U); sales-mix variance = $320,000 (F); calculate the static-budget variance. A) $90,000 (U) B) $320,000 (U) C) $320,000 (F) D) $290,000 (F)
A
Homogeneous cost pool leads to which of the following? A) more accurate costs of a given cost object B) more resources being assigned to that cost object C) the need for more cost drivers D) the need for different cost allocation bases to allocate the costs
A
In cost allocation, R&D costs are used to ________. A) provide information for economic decisions B) report to external parties when using generally accepted accounting principles C) calculate costs of a government contract D) calculate prime cost of a product
A
More insight into the sales-volume variance can be gained by subdividing it into ________. 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
Price discounts are influenced by ________. A) the volume of product purchased B) the prime cost of production C) the operational budget D) the contribution -margin per unit
A
The Conity Corporation has an Electric Mixer Division and an Electric Lamp Division. Of a $16,000,000 bond issuance, the Electric Mixer Division used $9,600,000 and the Electric Lamp Division used $6,400,000 for expansion. Interest costs on the bond totaled $1,000,000 for the year. What amount of interest costs should be allocated to the Electric Lamp Division? (Round any intermediary calculations two decimal places and your final answer to the nearest dollar.) A) $400,000 B) $600,000 C) $625,000 D) $6,400,000
A
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 Budgeted sales in units 2800 800 Budgeted selling price $600 $1,700 Budgeted contribution margin per unit $400 $1,050 Actual sales in units 3100 1500 Actual selling price $650 $1,680 What is the budgeted sales-mix percentage for the Standard and the Super vacuum cleaners, respectively? A) 0.78 and 0.22 B) 0.67 and 0.33 C) 0.22 and 0.78 D) 0.33 and 0.67
A
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 2017 were as follows: Static Budget Victor House-Mate Total Number sold 6000 24,000 30,000 Contribution margin $1,560,000 $3,120,000 $4,680,000 Actual Results Victor House-Mate Total Number sold 5400 40,000 45,400 Contribution margin $1,400,000 $4,130,000 $5,530,000 What is the total sales-volume variance in terms of the contribution margin? A) $1,924,000 favorable B) $1,404,000 favorable C) $5,200,000 unfavorable D) $1,924,000 unfavorable
A
The sales-mix variance is calculated by ________. A) deducting budgeted contribution margin based on actual units at budgeted mix from budgeted contribution margin based on actual units sold at the actual mix B) deducting budgeted contribution margin based on budgeted units at actual mix from budgeted contribution margin based on actual units sold at the budgeted mix C) deducting budgeted contribution margin based on actual units at actual mix from budgeted contribution margin based on budgeted units sold at the budgeted mix D) deducting budgeted contribution margin based on actual units at actual mix from budgeted contribution margin based on actual units sold at the actual mix
A
The sales-mix variance will be unfavorable when which of the following occurs? A) the actual sales mix shifts toward the less profitable units B) the contribution margin per composite unit for the actual mix is greater than the budgeted mix C) the actual unit sales are less than the budgeted unit sales D) the actual contribution margin is less than the static-budget contribution margin
A
The static-budget variance is the difference between ________. A) an actual result and the corresponding budgeted amount in the static budget B) the budget amount in the static budget and the amount in the flexible budget C) an actual result and the flexible budget amount D) the static budget amount and the sales-volume variance
A
To guide cost allocation decisions, the fairness or equity criterion ________. A) considers reasonableness as a matter of judgment rather than an operational criterion B) allocates cost among the beneficiaries in proportion to the benefits each receives C) is used more frequently than any other criteria D) is the primary criterion used in activity-based costing
A
What might explain why some managers advocate fully allocating all costs, including corporate costs to distribution channels and to customers? A) all costs are incurred to support sales of products to customers B) division managers can influence and control corporate costs C) distribution channel managers can control corporate costs D) all costs need to be considered to conduct adequate variance analysis
A
Which of the following classifications would costs incurred to handle each unit sold fit into? A) customer output unit-level cost B) customer batch-level cost C) customer-sustaining cost D) corporate-sustaining cost
A
Which of the following illustrates a purpose for allocating costs to cost objects? A) to provide information for cost-control and pricing decisions B) to provide information to customers C) to determine marginal cost D) to measure capital expenditure
A
Which of the following is an example of division-sustaining costs? A) research and development cost B) corporate administration costs C) corporate brand advertising D) shipment costs
A
Which of the following is true of corporate-sustaining costs? A) are common to all individual customers B) have a clear cause-and-effect relationship with several cost-allocation bases C) should be allocated for decisions regarding reducing customer costs D) evaluates the effectiveness of sales personnel
A
Woodruff Flowering Plants provides the following information for the month of May: Actual Budget Fuchsia Dogwood Fuchsia Dogwood Sales in units 20,000 4700 17,000 3100 Contribution margin per unit $23 $19 $22 $18 For May, Woodruff will report a(n) ________. A) favorable sales-mix variance B) unfavorable sales-mix variance C) favorable market-share variance D) unfavorable market-share variance
A
A company sets up cost pools for indirect cost allocation. Management sees clear cause-and-effect relationships between the incurrence of costs and the chosen the cost-allocation base. What other common relationships or basis with a cost allocation base might management utilize to allocate costs? A) R&D expenses B) benefits -received C) Capital investment in a related process D) gross profit proportions
B
A financial analyst for Simon Manufacturing prepared the following report: Customers Customer- Level Operating Income Customer Revenue A $5041.00 $26,250 B $4202.00 $30,000 C $3368.00 $15,000 D $1069.50 $7,300 E $984.80 $5,100 F $844.80 $4,400 G $336.60 $1,800 H $252.00 $4,500 I ($168.00) $2,400 J ($676.00) $2,600 What is the cumulative customer-level operating income as a percentage of customer level operating income for the top 4 most profitable (operating income) customers? A) 17.4% B) 89.7% C) 85.0% D) 79.1%
B
Archoid's Flowering Plants provides the following information for the month of May: Actual Budget Tulips Geraniums Tulips Geraniums Sales in units 4700 4080 4,950 3,300 Contribution margin per unit $15 $19 $10 $23 What is the budgeted contribution margin per composite unit for the budgeted mix? (Round any intermediary calculations two decimal places.) A) $17.02 B) $15.20 C) $19.00 D) $15.98
B
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: Actual Budget Calamine Capity Calamine Capity Sales in pounds 3800 lbs. 3980 lbs. 4,400 lbs. 3,300 lbs Price per pound $3.00 $2.90 $2.00 $3.00 Variable cost per pound 1.00 2.20 1.00 1.50 Contribution margin $2.00 $0.70 $1.00 $1.50 Budgeted and actual fixed corporate-sustaining costs are $1,850 and $2,300, respectively. What is the actual contribution margin for the month? A) $12,236 B) $9770 C) $9900 D) $10,386
B
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: Actual Budget Calamine Capity Calamine Capity Sales in pounds 3870 lbs. 3990 lbs. 4,400 lbs. 3,300 lbs Price per pound $3.00 $2.90 $2.00 $3.00 Variable cost per pound 1.20 2.40 1.00 1.50 Contribution margin $1.80 $0.50 $1.00 $1.50 Budgeted and actual fixed corporate-sustaining costs are $1,850 and $2,300, respectively. What is the contribution margin for the flexible budget? A) $8961 B) $9855 C) $9266 D) $10,811
B
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: Actual Budget Calamine Capity Calamine Capity Sales in pounds 3740 lbs. 3980 lbs. 5000 lbs. 3700 lbs Price per pound $2.80 $2.80 $2.00 $3.00 Variable cost per pound 1.00 2.00 1.00 1.50 Contribution margin $1.80 $0.80 $1.00 $1.50 Budgeted and actual fixed corporate-sustaining costs are $1,850 and $2,300, respectively. For the contribution margin, what is the total flexible-budget variance? A) $840 favorable B) $206 favorable C) $634 favorable D) $634 unfavorable
B
Customers making large contributions to the profitability of the company should ________. 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
B
Dropping an unprofitable customer will ________. 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
B
How is value-engineering relevant to a well done customer profitability analysis, especially when an ABC system is utilized to calculate customer profits (or losses)? A) ABC will satisfy GAAP and provide input into value-engineering decisions B) ABC offers the opportunity to analyze the costs of activities assigned to each customer and to determine if improvements can be made to optimize profits C) customer profitability analysis will reveal that the cost drivers of less profitable customers are the problem and that value-engineering is the solution D) Only value-added activities will be shown in the cost analysis and thus all other costs will be eliminated via value-engineering
B
If deciding whether to eliminate a distribution channel, allocating corporate-sustaining costs to distribution channels ________. 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
B
Segmenting customers as a result of customer profitability analysis would be done by which of the following groupings? A) geography such as state or by zip code B) operating income C) gross margin D) total direct costs
B
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 $9,500,000 and the Electric Lamp Division used $3,500,000 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? (Round any intermediary calculations two decimal places and your final answer to the nearest dollar.) A) $563,333 B) $711,750 C) $3,500,000 D) $9,500,000
B
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 Budgeted sales in units 2700 600 Budgeted selling price $600 $1,700 Budgeted contribution margin per unit $600 $1080 Actual sales in units 3000 1400 Actual selling price $650 $1,680 What is the total sales-mix variance in terms of the contribution margin? (Round intermediary calculations to two decimal places.) A) $369,600 favorable B) $295,680 favorable C) $1,034,880 favorable D) $665,280 favorable
B
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 2017 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 5500 39,000 44,500 Contribution margin $1,400,000 $4,130,000 $5,530,000 What is the total sales-mix variance in terms of the contribution margin? (Round any intermediary calculations two decimal places.) A) $925,600 unfavorable B) $613,600 unfavorable C) $312,000 favorable D) $1,237,600 favorable
B
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 2017 were as follows: Static Budget Victor House-Mate Total Number sold 6,000 24,000 30,000 Contribution margin $1,580,000 $3,140,000 $4,720,000 Actual Results Victor House-Mate Total Number sold 5,000 35,000 40,000 Contribution margin $1,900,000 $4,140,000 $6,040,000 What is the total static-budget variance in terms of the contribution margin? A) $680,000 favorable B) $1,320,000 favorable C) $1,320,000 unfavorable D) $680,000 unfavorable
B
The budgeted contribution margin per composite unit for the budgeted sales mix can be computed by dividing the ________. A) total budgeted contribution margin by the actual total units B) total budgeted contribution margin by the total budgeted units C) actual total contribution margin by the total actual total units D) actual total contribution margin by the total budgeted units
B
The sales-quantity variance results from a difference between ________. A) the actual sales mix and the budgeted sales mix B) the actual quantity of units sold and the budgeted quantity of unit sales in the static budget C) actual contribution margin and the budgeted contribution margin D) actual market size in units and the budgeted market size in units
B
The sales-quantity variance will be favorable when which of the following occurs? A) sales-volume variance and flexible-budget variance are favorable B) actual units of all products sold exceed budgeted units of all products sold C) the actual sales mix shifts towards the more profitable units D) static-budget variance and flexible-budget variance are favorable
B
The sales-quantity variance will be unfavorable when which of the following occurs? 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
B
The sales-volume variance is subdivided into ________. A) sales-mix variance and static-budget variance B) sales-mix variance and sales-quantity variance C) flexible-budget variance and fixed-budget variance D) market-share variance and static-budget variance
B
The sales-volume variance is the difference between ________. A) a sales-mix variance and the corresponding sales-quantity variance B) a flexible-budget amount and the corresponding static-budget amount C) a market-share variance and the corresponding market-size variance D) a sales-mix variance and the corresponding market size variance
B
To allocate corporate costs to divisions, the ideal situation would be for the allocation base to ________. A) be an output unit-level base B) have the best cause-and-effect relationship with the costs C) combine administrative costs and human resource management costs D) allocate the fixed costs only
B
To guide cost allocation decisions, the cause-and-effect criterion ________. 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
B
To improve customer profitability, companies should track which of the following? A) only the final invoice price of a sale B) the volume of the products purchased by each customer C) the location of each customer D) the customer profile
B
When corporate-sustaining costs are fully allocated to distribution channels, then the sum of the operating income from each distribution-channel is ________. A) greater than company wide operating income B) equal to company wide operating income C) equal to customer-level operating income D) greater than customer-level operating income
B
When the cost pools are homogeneous which of the following will be true? 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
B
When the purpose of cost allocation is to provide information for economic decisions or to motivate managers and employees, which of the following would be the best 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
B
Which of the following classifications would be the most appropriate for the cost of the manager of a retail distribution channel? A) customer-sustaining cost B) distribution-channel cost C) customer batch-level cost D) corporate-sustaining cost
B
Which of the following classifications would be the most relevant for the costs incurred to process orders? A) customer output unit-level cost B) customer batch-level cost C) customer-sustaining cost D) corporate-sustaining cost
B
Which of the following criteria has the presumption that the more-profitable divisions have a greater ability to absorb corporate administration costs? A) the fairness or equity criterion B) the ability to bear criterion C) the cause-and-effect criterion D) the benefits-received criterion
B
Which of the following is a challenge to using cost-benefit criteria for allocating costs? A) the costs of designing and implementing complex cost allocations are not readily apparent B) the benefits of making better-informed pricing decisions are difficult to measure C) cost systems are being simplified and fewer multiple cost-allocation bases are being used D) the costs of collecting and processing information keep spiraling upward
B
Which of the following is a corporate-sustaining cost? A) design costs B) corporate brand advertising C) shipment costs D) research and development costs
B
Which of the following is a reason to gather data, associate revenues with each customer and develop a system of allocating costs to each customer? A) GAAP requirements for external reporting including 10K disclosures B) to assure that highly profitable customers get the appropriate level of care and attention C) ABC systems cannot be implemented without customer-profitability reporting D) to assure that more resources are committed to loss-making customers in an attempt to retain all customers
B
Which purpose of cost allocation is used to encourage sales representatives to push high-margin products or services? 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
B
) A company has two distribution channels: wholesale and business sales. Which of the following costs would be allocated as distribution-channel-level costs when analyzing the profitability of customer distribution channels? A) sales order costs B) customer visit costs C) salary of the wholesale distribution channel manager D) corporate adminstration costs
C
) Managers use a customer-profitability analysis report to ensure that ________. A) unpaid invoices are categorized according to age by due date B) costs related to customers are segmented into different cost pools on the basis of different types of cost drivers or cost-allocation bases C) customers making large contributions to the operating income of a company receive a high level of attention from the company D) cost allocation of indirect cost is in place Answer: C
C
A customer cost hierarchy categorizes costs related to customers into different cost pools on the basis of different ________. A) contribution-margin ratios of products B) distribution-channel costs C) levels of cause-and-effect relationships D) division-sustaining costs
C
A financial analyst for Simon Manufacturing prepared the following report: Customers Customer- Level Operating Income Customer Revenue A $5646.00 $26,250 B $4773.00 $30,000 C $3705.00 $15,000 D $1155.50 $7,300 E $984.80 $5,100 F $844.80 $4,400 G $336.60 $1,800 H $252.00 $4,500 I ($168.00) $2,400 J ($676.00) $2,600 Which of the following conclusions can be drawn from the report? A) All profitable customers achieve customer level operating income in excess of 20% B) Customer B has the second highest operating income margin C) The cumulative customer-level operating income of the top eight customers represents about 105.0% of operating income D) All customers provide positive contribution towards profitability
C
Dartmouth Building Products Inc. provides the following information. Corporate advertising costs = $850,000 Division A - $5,000,000 Division B - $20,000,000 Number of ads run relevant on Division A products 500 Number of ads run relevant to Division B products 3667 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 A? A) $748,000 B) $212,500 C) $170,000 D) $850,000
C
Dartmouth Building Products Inc. provides the following information. Corporate advertising costs = $860,000 Division A - $4,900,000 Division B - $19,600,000 Number of ads run on Division A products 600 Number of ads run on Division B products 4400 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? A) $756,800 B) $215,000 C) $688,000 D) $172,000
C
More insight into the static-budget variance can be gained by subdividing it into ________. 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
C
NOT allocating some corporate costs to divisions and products results in which of the following? 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
The Conity Corporation has an Electric Mixer Division and an Electric Lamp Division. Of a $15,000,000 bond issuance, the Electric Mixer Division used $9,400,000 and the Electric Lamp Division used $5,600,000 for expansion. Interest costs on the bond totaled $980,000 for the year. The above interest costs would be considered a(n) ________. A) output unit-level cost B) facility-sustaining cost C) product-sustaining cost D) batch-level cost
C
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 Budgeted sales in units 2700 700 Budgeted selling price $600 $1,700 Budgeted contribution margin per unit $500 $1070 Actual sales in units 2800 1400 Actual selling price $650 $1,680 What is the total sales-quantity variance in terms of the contribution margin? (Round intermediary calculations to two decimal places.) A) $316,000 favorable B) $179,760 favorable C) $495,760 favorable D) $136,240 favorable
C
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 2017 were as follows: Static Budget Victor House-Mate Total Number sold 6200 26,000 32,200 Contribution margin $1,590,000 $3,170,000 $4,760,000 Actual Results Victor House-Mate Total Number sold 5300 37,000 42,300 Contribution margin $1,400,000 $4,130,000 $5,530,000 What is the total flexible-budget variance in terms of the contribution margin? (Round intermediary calculations to the nearest dollar.) A) $340,800 favorable B) $1,356,800 favorable C) $340,800 unfavorable D) $4,514,000 unfavorable
C
The difference between budgeted contribution margin per composite unit for the actual mix and the budgeted contribution margin per composite unit for the budgeted mix is the ________. A) material-mix variance B) flexible-budget variance C) sales-mix variance D) sales-volume variance
C
To guide cost allocation decisions, the ability to bear criterion ________. A) is the primary criterion used in activity-based costing B) allocates cost among the beneficiaries in proportion to the benefits each receives. C) results in subsidizing products that are not profitable D) is used more frequently than any other criteria
C
To reduce distribution-channel costs, a company could ________. A) improve the efficiency of the ordering process B) make fewer customer visits C) eliminate distribution to retailers and only service wholesalers D) reduce product-handling costs
C
When individual activities within a cost pool have a similar relationship with the cost driver, which of the following could be said about the cost pool? A) the costs accumulated in the cost pool are not used for customer-profitability analysis B) there is a need for need multiple cost drivers to allocate costs from the pool to customers C) the cost pool is considered a homogeneous cost pool D) the cost pool is considered contains only direct variable costs
C
Which cost-allocation criterion is most likely to subsidize poor performers at the expense of the best performers? A) the fairness or equity criterion B) the benefits-received criterion C) the ability to bear criterion D) the cause-and-effect criterion
C
Which of the following classifications of costs in the customer-cost hierarchy would be most appropriate for the costs of activities to sell each unit to a customer? A) customer-sustaining costs B) division-sustaining costs C) customer output unit-level costs D) distribution-channel costs
C
Which of the following classifications would the cost of visiting customers would most likely fit into? A) customer output unit-level cost B) customer batch-level cost C) customer-sustaining cost D) corporate-sustaining cost
C
Which of the following customer related costs are NOT economically feasible to trace but are related to a customer? A) the additional cost of selling one more unit to a new customer who has never done business with the firm before B) the direct material costs of a product that a customer has purchased C) the allocation of the cost of travel, lodgings, and meals that result from visiting customers at their locations D) the shipping costs that result from shipping a package by Fed Ex to a customer when the technology allows a direct match of that cost to the direct material and direct labor costs of the product
C
Which of the following is true about discontinuing an unprofitable customer? A) will eliminate all corporate costs assigned to and may result in losing more revenues relative to costs saved B) will eliminate all costs assigned to and may result in gaining more revenues relative to costs saved C) will not eliminate all costs assigned to and may result in losing more revenues relative to costs saved D) will not eliminate all corporate costs assigned to and may result in gaining more revenues relative to costs saved
C
________ categorizes costs related to customers into different cost pools on the basis of either different classes of cost drivers or different degrees of difficulty in determining the cause-and-effect (or benefits-received) relationships. A) Customer-profitability analysis B) Customer revenues C) Customer cost hierarchy D) Price discounting
C
) 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: Actual Budget Calamine Capity Calamine Capity Sales in pounds 3850 lbs. 3980 lbs. 4500 lbs. 3500 lbs Price per pound $2.80 $2.80 $2.00 $3.00 Variable cost per pound 1.00 2.00 1.00 1.50 Contribution margin $1.80 $0.80 $1.00 $1.50 Budgeted and actual fixed corporate-sustaining costs are $1,850 and $2,300, respectively. For the contribution margin, what is the total static-budget variance? A) $6930 favorable B) $364 unfavorable C) $70 favorable D) $364 favorable
D
Allocation of corporate-sustaining costs is useful for which of the following? 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
D
Archoid's Flowering Plants provides the following information for the month of May: Actual Budget Tulips Geraniums Tulips Geraniums Sales in units 4500 4100 4,950 3,300 Contribution margin per unit $15 $19 $10 $21 What is the budgeted contribution margin per composite unit for the actual mix? (Round any intermediary calculations two decimal places.) A) $14.40 B) $15.72 C) $19.00 D) $15.28
D
Flexible budget contribution margin is equal to ________. A) actual contribution margin per unit times actual units sold of each product B) actual contribution margin per unit times budgeted units sold of each product C) budgeted contribution margin per unit times budgeted units sold of each product D) budgeted contribution margin per unit times actual units sold of each product
D
For companies in which full allocation is not followed, which of the following is true of corporate sustaining costs? A) allocated to divisions using cause-and-effect relationship B) allocated to customers using cause-and-effect relationship C) added to aggregate operating incomes of the divisions D) subtracted as a lump-sum amount after aggregating operating incomes of the divisions
D
Market-share variance = $380,000 (U); Market-size variance = $250,000 (F); Sales-mix variance = $640,000 (F); calculate the sales-quantity variance. A) $380,000 (F) B) $630,000 (F) C) $10,000 (F) D) $130,000 (U)
D
Salary of top management and general-administration costs is an example of which of the following? A) customer output unit-level costs B) customer batch-level costs C) distribution-channel costs D) corporate-sustaining costs
D
Sales-mix variance = $300,000 (F), sales-quantity variance = $250,000 (F), flexible-budget variance = $120,000 (F), market-size variance = $80,000 (U), calculate the sales-volume variance. A) $750,000 (F) B) $500,000 (F) C) $630,000 (F) D) $550,000 (F)
D
Sales-mix variance = $300,000 (F), sales-volume variance = $470,000 (U), flexible-budget variance = $230,000 (F), market-size variance = $34,000 (U), calculate the sales-quantity variance. A) $770,000 (U) B) $804,000 (U) C) $136,000 (U) D) $170,000 (U)
D
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 Budgeted sales in units 2800 640 Budgeted selling price $600 $1,700 Budgeted contribution margin per unit $430 $1050 Actual sales in units 3000 1200 Actual selling price $650 $1,680 What is the total sales-volume variance in terms of the contribution margin? A) $674,000 unfavorable B) $502,000 favorable C) $588,000 unfavorable D) $674,000 favorable
D
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 2017 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 5300 35,000 40,300 Contribution margin $1,400,000 $4,130,000 $5,530,000 What is the total sales-quantity variance in terms of the contribution margin? (Round any intermediary calculations two decimal places.) A) $1,606,800 unfavorable B) $535,600 favorable C) $1,071,200 unfavorable D) $1,606,800 favorable
D
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 2017 were as follows: Static Budget Victor House-Mate Total Number sold 6200 28,000 34,200 Contribution margin $1,560,000 $3,140,000 $4,700,000 Actual Results Victor House-Mate Total Number sold 5400 39,000 44,400 Contribution margin $1,400,000 $4,130,000 $5,530,000 What is the contribution margin for the flexible budget? (Round intermediary calculations to the nearest dollar.) A) $1,360,800 B) $4,368,000 C) $4,698,400 D) $5,728,800
D
The sales-mix variance will be favorable when ________. A) the actual contribution margin is greater than the static-budget contribution margin B) actual unit sales are more than budgeted unit sales C) the actual sales mix shifts toward the less profitable units D) the budgeted contribution margin for actual sales mix is greater than for the budgeted mix
D
The sales-quantity variance can be decomposed into ________. 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
D
The static-budget variance will be favorable, when ________. A) budgeted unit sales are more than actual unit sales B) the actual contribution margin is less than the static-budget contribution margin C) the actual sales mix shifts toward the less profitable units D) the flexible-budget and the sales-volume variance are favorable
D
To guide cost allocation decisions, the benefits-received criterion ________. 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
D
Which of the following is the formula for the sales-quantity variance? 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
D
Which of the following is true about the process of making cost allocations? A) the costs of designing and implementing a cost allocation system are less visible than the benefits of such a system B) a cost benefit-analysis cannot be performance on cost allocation systems because the benefits are difficult to estimate C) the costs of cost allocation systems is mostly the cost of collection D) as the cost of collecting and processing cost allocation information decreases, it becomes more economically feasible to provide more detailed cost allocations Answer: D
D
While allocating corporate costs to divisions ________. A) only fixed costs should be allocated B) no homogeneous cost pools should be constructed C) all the costs in the cost pool should not have the same or a similar cause-and-effect or benefits-received relationship with the cost-allocation base D) allocate both variable and fixed costs to divisions and then to customers
D
Woodruff Flowering Plants provides the following information for the month of May: Actual Budget Fuchsia Dogwood Fuchsia Dogwood Sales in units 19,000 4700 17,000 3000 Contribution margin per unit $22 $19 $21 $17 What is the budgeted contribution margin per composite unit for the actual mix? (Round any intermediary calculations two decimal places.) A) $21.22 B) $21.00 C) $20.50 D) $20.20
D
Woodruff Flowering Plants provides the following information for the month of May: Actual Budget Fuchsia Dogwood Fuchsia Dogwood Sales in units 22,000 4600 17,000 3300 Contribution margin per unit $24 $19 $23 $17 What is the budgeted contribution margin per composite unit for the budgeted mix? (Round any intermediary calculations two decimal places.) A) $22.79 B) $22.21 C) $21.96 D) $22.04
D