The following information about the two motorcycle models produced by Custom Choppers, Inc. is given: \[\begin{array} { | l | r | r | } \hline & \text { Budgeted } & \text { Actual } \\ \hline \text { Standard model sales in units } & 300 & 500 \\ \hline \text { Customized model sales in units } & 100 & 150 \\ \hline \text { Standard model budgeted contribution margin } & \$ 3,500 & \\ \hline \text { Customized model budgeted contribution margin } & \$ 6,500 & \\ \hline \text { Budgeted average unit contribution margin } & \$ 4,250 & \\ \hline \text { Total contribution margin } & \$ 1,700,000 & \$ 3,525,000 \\ \hline \end{array}\] Calculate the sales mix variance.

Sales mix variance = [(Standard model ac

Sarandon Company has the following information pertaining to its two divisions for 2018: $\begin{array}{lrr}&\text { Division } A & \text { Division } B\\ \text { Variable selling and admin. expenses } & \$ 35,000 & \$ 45,000 \\ \text { Direct fixed manufacturing expenses } & 17,500 & 50,000 \\ \text { Sales } & 100,000 & 200,000 \\ \text { Direct fixed selling and admin. expenses } & 15,000 & 35,000 \\ \text { Variable manufacturing expenses } & 20,000 & 50,000 \end{array}$ Common expenses are $12,000 for 2018. What is the operating income for Sarandon Company?

A) $300,000 B) $32,500 C) $150,000 D) $20,500 A) $300,000 B) $32,500 C) $150,000 D) $20,500

The income statement of Cadmium Inc., for the month of January of the current year is as follows: $\begin{array}{lr} \text { Revenues }&&\$12,000\\ \text { Cost of goods sold: }\\ \text { Direct materials } & \$ 6,000 \\ \text { Direct labor } & 4,000 \\ \text { Overhead } & 2,000&\$12,000\\ \text { Gross profit } && \$ 9,000 \\ \text { Selling and administrative expenses } && 2,000 \\ \text { Onerating income } && \$ 7,000 \end{array}$ Determine the markup based on cost of goods sold (COGS).

A) 75% B) 50% C) 100% D) 95% A) 75% B) 50% C) 100% D) 95%

Sarandon Company has the following information pertaining to its two divisions for 2018: $\begin{array}{lrr}&\text { Division } A & \text { Division } B\\ \text { Variable selling and admin. expenses } & \$ 35,000 & \$ 45,000 \\ \text { Direct fixed manufacturing expenses } & 17,500 & 50,000 \\ \text { Sales } & 100,000 & 200,000 \\ \text { Direct fixed selling and admin. expenses } & 15,000 & 35,000 \\ \text { Variable manufacturing expenses } & 20,000 & 50,000 \end{array}$ Common expenses are $12,000 for 2018. What is the segment margin for Division B?

A) $155,000 B) $105,000 C) $55,000 D) $20,000 A) $155,000 B) $105,000 C) $55,000 D) $20,000

Girasol Products is thinking of expanding their product line. Their current income statement is as follows: $\begin{array}{lrr} \text { Revenues } & & \$ 600,000 \\ \text { Cost of Goods Sold: } & & \\ \text { Direct Materials } & \$ 250,000 & \\ \text { Direct Labor } & 100,000 & \\ \text { Overhead } & 80,000 & 430,000 \\ \text { Gross Frofit } & & 170,000 \\ \text { Selling and Administrative } & & 70,000 \\ \text { Operating Income } & & \$ 100,000 \\ \hline \end{array}$ The cost of the new product is $95 per unit made up of $50 of direct materials, $35 of direct labor and $10 of overhead per unit. What is the bid price assuming Girasol utilizes a mark-up on direct materials?

A) $119 B) $133 C) $70 D) $19.77 A) $119 B) $133 C) $70 D) $19.77

Exam 18: Pricing and Profitability Analysis

The budgeted contribution margin of two products is $1,000 the actual contribution margin is $500 and the total variable expenses are $750. The contribution margin variance is:

(Multiple Choice)

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Question 41

Consider the following portion of a segmented income statement for the year just ended. Assume that the fixed expenses of Division X include $30,000 of direct expenses and that the discontinuance of the department will not affect the sales of the other departments nor reduce the common expenses. Division x Sales \ 100,000 Variable manufacturing costs 60,000 Gross profit \ 40,000 Fixed expenses (direct and allocated) 50,000 Operating income (loss) \ (10,000) What is X's divisional segment margin?

(Multiple Choice)

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Question 42

Franklin Company's expected sales were 2,000 units at $100 per unit. During 2018, it had actual sales of 1,800 units at $110 per unit. Budgeted variable costs were $60 per unit. What is Franklin's sales volume variance?

(Multiple Choice)

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Question 43

The following information about the two motorcycle models produced by Custom Choppers, Inc. is given: Budgeted Actual Standard model sales in units 300 500 Customized model sales in units 100 150 Standard model budgeted contribution margin \ 3,500 Customized model budgeted contribution margin \ 6,500 Budgeted average unit contribution margin \ 4,250 Total contribution margin \ 1,700,000 \ 3,525,000 Calculate the sales mix variance.

(Essay)

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Question 44

When firms with market power price products "too high", companies are:

(Multiple Choice)

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Question 45

Product-level costs are highest in the maturity phase and fall through the decline phase.

(True/False)

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Question 46

There are three types of market structure: monopoly, oligopoly, and perfect competition.

(True/False)

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Question 47

Sarandon Company has the following information pertaining to its two divisions for 2018: Division A Division B Variable selling and admin. expenses \ 35,000 \ 45,000 Direct fixed manufacturing expenses 17,500 50,000 Sales 100,000 200,000 Direct fixed selling and admin. expenses 15,000 35,000 Variable manufacturing expenses 20,000 50,000 Common expenses are $12,000 for 2018. What is the operating income for Sarandon Company?

(Multiple Choice)

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Question 48

When monthly production volume is constant and sales volume is less than production, net income determined with variable costing procedures will

(Multiple Choice)

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Question 49

Which of the following is true of the price skimming policy of pricing a product?

(Multiple Choice)

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Question 50

In activity-based costing (ABC), unit-level costs are highest in the:

(Multiple Choice)

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Question 51

The income statement of Cadmium Inc., for the month of January of the current year is as follows: Revenues \1 2,000 Cost of goods sold: Direct materials \ 6,000 Direct labor 4,000 Overhead 2,000 \1 2,000 Gross profit \ 9,000 Selling and administrative expenses 2,000 Onerating income \ 7,000 Determine the markup based on cost of goods sold (COGS).

(Multiple Choice)

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Question 52

Sarandon Company has the following information pertaining to its two divisions for 2018: Division A Division B Variable selling and admin. expenses \ 35,000 \ 45,000 Direct fixed manufacturing expenses 17,500 50,000 Sales 100,000 200,000 Direct fixed selling and admin. expenses 15,000 35,000 Variable manufacturing expenses 20,000 50,000 Common expenses are $12,000 for 2018. What is the segment margin for Division B?

(Multiple Choice)

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Question 53

Another term for predatory pricing in the international market is __________ .

(Short Answer)

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Question 54

The market size variance is the difference between actual and budgeted industry sales in units, multiplied by the budgeted market share percentage, times the:

(Multiple Choice)

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Question 55

When a higher price is charged at the beginning of a product's life cycle it is called:

(Multiple Choice)

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Question 56

Girasol Products is thinking of expanding their product line. Their current income statement is as follows: Revenues \ 600,000 Cost of Goods Sold: Direct Materials \ 250,000 Direct Labor 100,000 Overhead 80,000 430,000 Gross Frofit 170,000 Selling and Administrative 70,000 Operating Income \ 100,000 The cost of the new product is $95 per unit made up of $50 of direct materials, $35 of direct labor and $10 of overhead per unit. What is the bid price assuming Girasol utilizes a mark-up on direct materials?

(Multiple Choice)

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Question 57

The legal system supports business competition by allowing an open policy on pricing.

(True/False)

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Question 58

The majority of the product cost is "locked in" during which of the following life-cycle stages?

(Multiple Choice)

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Question 59

Firms enjoy greater success when they include the impact of profits on their employees and the community.

(True/False)

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Question 60

The budgeted contribution margin of two products is $1,000 the actual contribution margin is $500 and the total variable expenses are $750. The contribution margin variance is:

Franklin Company's expected sales were 2,000 units at $100 per unit. During 2018, it had actual sales of 1,800 units at $110 per unit. Budgeted variable costs were $60 per unit. What is Franklin's sales volume variance?

When firms with market power price products "too high", companies are:

Product-level costs are highest in the maturity phase and fall through the decline phase.

There are three types of market structure: monopoly, oligopoly, and perfect competition.

When monthly production volume is constant and sales volume is less than production, net income determined with variable costing procedures will

Which of the following is true of the price skimming policy of pricing a product?

In activity-based costing (ABC), unit-level costs are highest in the:

Another term for predatory pricing in the international market is __________ .

The market size variance is the difference between actual and budgeted industry sales in units, multiplied by the budgeted market share percentage, times the:

When a higher price is charged at the beginning of a product's life cycle it is called:

The legal system supports business competition by allowing an open policy on pricing.

The majority of the product cost is "locked in" during which of the following life-cycle stages?

Firms enjoy greater success when they include the impact of profits on their employees and the community.

Introduction to Cost Management

Basic Cost Management Concepts

Cost Behavior

Activity-Based Costing

Product and Service Costing: Job-Order System

Process Costing

Allocating Costs of Support Departments and Joint Products

Budgeting for Planning and Control

Standard Costing: a Functional-Based Control Approach

Decentralization: Responsibility Accounting, Performance

Strategic Cost Management

Activity-Based Management

The Balanced Scorecard: Strategic-Based Control

Quality and Environmental Cost Management

Lean Accounting and Productivity Measurement

Cost-Volume-Profit Analysis

Activity Resource Usage Model and Tactical Decision Making

Capital Investment

Inventory Management: Economic Order Quantity, Jit, and the Theory of Constraints

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