Question 1

What is the formula used to calculate market share variance?

Accepted Answer

A) [(Actual industry sales in units - Budgeted industry sales in units) * (Budgeted market share percentage)] * (Budgeted average unit contribution margin) 
B) [(Actual market share percentage - Budgeted market share percentage) *(Actual industry sales in units)] * (Budgeted average unit contribution margin) 
C) (Actual quantity sold - Budgeted quantity sold) * Budgeted average unit contribution margin 
D) (Actual quantity sold - Budgeted quantity sold) * Actual average unit contribution margin 
A) [(Actual industry sales in units - Budgeted industry sales in units) * (Budgeted market share percentage)] * (Budgeted average unit contribution margin) 
B) [(Actual market share percentage - Budgeted market share percentage) *(Actual industry sales in units)] * (Budgeted average unit contribution margin) 
C) (Actual quantity sold - Budgeted quantity sold) * Budgeted average unit contribution margin 
D) (Actual quantity sold - Budgeted quantity sold) * Actual average unit contribution margin

Question 2

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

Accepted Answer

A) introduction 
B) growth 
C) development 
D) decline 
A) introduction 
B) growth 
C) development 
D) decline

Question 3

What is the term for charging a higher price at the beginning of a product's life cycle?

Accepted Answer

A) penetration pricing 
B) predatory pricing 
C) price skimming 
D) target costing 
A) penetration pricing 
B) predatory pricing 
C) price skimming 
D) target costing

Question 4

On the international market,which of the following is called dumping?

Accepted Answer

A) price discrimination 
B) predatory pricing 
C) price skimming 
D) penetration pricing 
A) price discrimination 
B) predatory pricing 
C) price skimming 
D) penetration pricing

Question 5

What is the primary difference between variable and absorption costing?

Accepted Answer

A) inclusion of fixed selling expenses in product costs 
B) inclusion of variable factory overhead in period costs 
C) inclusion of fixed selling expenses in period costs 
D) inclusion of fixed factory overhead in product costs 
A) inclusion of fixed selling expenses in product costs 
B) inclusion of variable factory overhead in period costs 
C) inclusion of fixed selling expenses in period costs 
D) inclusion of fixed factory overhead in product costs

Question 6

What are common segment costs when contrasted with direct segment costs?

Accepted Answer

A) costs of all segments such as direct labour 
B) costs related to more than one segment and not directly traceable to a particular segment 
C) costs incurred at one level for the benefit of one segment 
D) costs incurred by all segments and are directly traceable to all segments 
A) costs of all segments such as direct labour 
B) costs related to more than one segment and not directly traceable to a particular segment 
C) costs incurred at one level for the benefit of one segment 
D) costs incurred by all segments and are directly traceable to all segments

Question 7

Many products have a predictable profit or product life cycle.Describe the product life cycle from the marketing perspective.In addition,graph profit versus the different phases.Finally,discuss the impact of the product life cycle on products,learning effects,setups,purchasing,and marketing expenses.

Accepted Answer

The product life cycle describes the pro

Question 8

The variable costing income statement for Jackson Company for the current year is as follows:
 $\begin{array}{lll}
\text {Sales (5,000 units)}&&\$100,000\
\text {Variable expenses:}\
\text {Cost of goods sold}&\$30,000\
\text {Selling (10\% of sales)}& \underline{10,000}& \underline{40,000}\
\text {Contribution margin}&&\$60,000\
\text {Fixed expenses:}\
\text { Manufacturing overhead } &\$ 24,000\
\text { Administrative }& \underline{14,400 }& \underline{38,400} \
\text { Net income } && \underline{\$21,600 }\
\end{array}$

$\text { Selected data for } 2011 \text { concerning the operations of the company are as follows: }$

$\begin{array}{ll}
\text { Beginning inventory } & 0 \text { units } \
\text { Units produced } & 8,000 \text { units }
\end{array}$

$\begin{array}{lr}
\text { Manufacturing costs: }\
\text { Direct labour } & \$ 3.00 \text { per unit } \
\text { Direct materials } & 1.60 \text { per unit } \
\text { Variable overhead } & 1.40 \text { per unit }
\end{array}$ Prepare an absorption costing income statement for the current year.

Accepted Answer

None

Question 9

Vicki Johns operates a catering company.Vicki provides food and servers for parties.She also rents tables,chairs,dinnerware,glassware,and linens.Alan and Debbie Holms contacted Vicki about catering for their daughter's wedding.They have requested an open bar,hors d'oeuvres (enough for 300 people),a large wedding cake,and 40 tables with linens,dinnerware,and glassware.Vicki put together the following bid:
  $\begin{array}{llr}
  \text {  Food \( (300 \times \$ 7.50) $
} &\$2,250\
 \text { Wedding cake (\$150) } &150\
 \text {Beverages $ (300 \times \$ 5) $  } &1,500\
 \text { Servers $ (12 \times 4 $ hours $ \times \$ 10) $ } &480\
 \text {Bartender $ (1 \times 3 $ hours $ \times \$ 12) $  } &36\
 \text {  Rental of:} &\
 \text { Linens } &80\
 \text {Tables  } &200\
 \text {Dinnerware  } &80\
 \text {  Glassware} &80\
 \text {Total  } &\$4,856\

\end{array}\)
 Suppose that the Holmses blanch when they see the bid.Mr.Holms suggests that they had hoped to spend approximately $3,750 on the party.How could Vicki work with the Holmses to achieve a target cost of that amount?

Accepted Answer

Vicki will need to sit down with the Hol

Question 10

What is the term for pricing a new product at a low initial price to build market share quickly?

Accepted Answer

A) penetration pricing 
B) predatory pricing 
C) price skimming 
D) target costing 
A) penetration pricing 
B) predatory pricing 
C) price skimming 
D) target costing

Question 11

When is net income the largest?

Accepted Answer

A) Absorption costing net income exceeds variable costing net income when units produced and sold are equal. 
B) Variable costing net income exceeds absorption costing net income when units produced exceed units sold. 
C) Absorption costing net income exceeds variable costing net income when units produced are less than units sold. 
D) Absorption costing net income exceeds variable costing net income when units produced are greater than units sold. 
A) Absorption costing net income exceeds variable costing net income when units produced and sold are equal. 
B) Variable costing net income exceeds absorption costing net income when units produced exceed units sold. 
C) Absorption costing net income exceeds variable costing net income when units produced are less than units sold. 
D) Absorption costing net income exceeds variable costing net income when units produced are greater than units sold.

Question 12

The following information pertains to Mayberry Corporation: $\begin{array}{llr}
  \text { Beginning inventory } &1,000 \text { units }\
 \text {  Endling inventory} &6,000 \text { units }\
 \text {Direct labour per unit  } &\$40\
 \text { Direct materials per unit } &20\
 \text { Variable overhead per unit } &10\
 \text {Fixed overhead per unit  } &30\
  \text { Variable selling and admin. costs per unit } &6\
 \text { Fixed selling and admin. costs per unit } &14\
\end{array}$

What is the value of the ending inventory using the absorption costing method?

Accepted Answer

A) $240,000 
B) $360,000 
C) $420,000 
D) $600,000 
A) $240,000 
B) $360,000 
C) $420,000 
D) $600,000

Question 13

Eastwood Company has the following information for the current year: $\begin{array}{llr}
  \text {  Selling price} &\$ 150 \text { per unit}\
 \text {  Variable production costs} & \$ 40  \text {  per unit produced}\
 \text {Variable selling and admin. expenses  } &\$ 16  \text { per unit sold}\
 \text {  Fixed production costs} &\$ 200,000\
 \text {Fixed selling and admin. expenses  } &\$ 140,000\
 \text {  Units produced }&10,000 \text {  units}\
\text { Units sold }&8.000 \text {  units}
\end{array}$
 There were no beginning inventories.
What is the ending inventory for Eastwood using the absorption costing method?

Accepted Answer

A) $80,000 
B) $120,000 
C) $180,000 
D) $300,000 
A) $80,000 
B) $120,000 
C) $180,000 
D) $300,000

Question 14

Answer the following:
a.Discuss each of the following economic market structures (i.e.,number of firms in industry,barriers to entry,uniqueness of product):
i.Perfectly competitive market
ii.Monopolistic competition
iii.Oligopoly
iv.Monopoly
b.Match the following industries with the appropriate economic market:
Local cable television company
Restaurants
Canada Post
Cereal
Wheat farmer
Automotive

Accepted Answer

The answer of Answer the following:
a.Discuss each of the following...

Question 15

Anderson Company manufactures a variety of toys and games. John Boone, president, is disappointed in the sales of a new board game. The game sold only 10,000 units in the current year when 30,000 were projected. Sales for the following year look no better. At $100 per game, it is not a hot seller. Direct costs of the board game are $56 variable cost and $100,000 fixed. John is considering several options. Option One: Cut the price to $70 and perhaps sell 15,000 units. Option Two: Cut the price to $60, reduce material costs by $10, and cut advertising by $60,000. Anticipated volume for this option is 10,000 units. Option Three: Cut the price to $80 and include a $10 mail-in rebate offer. It is anticipated that 15,000 units could be sold and only 30 percent of the rebate coupons would be redeemed. Option Four:  Cut the price to $60 per game and possibly sell 20,000 units.
-Refer to the figure.What customer type has the least total cost per case?

Accepted Answer

A) local pharmacies 
B) drugstore chains 
C) supermarket chains 
D) gas station chains 
A) local pharmacies 
B) drugstore chains 
C) supermarket chains 
D) gas station chains

Question 16

The following information pertains to Mayberry Corporation: $\begin{array}{lr}
\text { Beginning inventory } & 1,000 \text { units } \
\text { Ending inventory } & 6,000 \text { units } \
\text { Direct labour per unit } & \$ 40 \
\text { Direct materials per unit } & 20 \
\text { Variable overhead per unit } & 10 \
\text { Fixed overhead per unit } & 30 \
\text { Variable selling and admin. costs per unit } & 6 \
\text { Fixed selling and admin. costs per unit } & 14
\end{array}$ How would absorption costing net income compare to variable costing net income?

Accepted Answer

A) It would be $150,000 greater. 
B) It would be $150,000 less. 
C) It would be $240,000 less. 
D) It would be $240,000 greater. 
A) It would be $150,000 greater. 
B) It would be $150,000 less. 
C) It would be $240,000 less. 
D) It would be $240,000 greater.

Question 17

Anderson Company manufactures a variety of toys and games. John Boone, president, is disappointed in the sales of a new board game. The game sold only 10,000 units in the current year when 30,000 were projected. Sales for the following year look no better. At $100 per game, it is not a hot seller. Direct costs of the board game are $56 variable cost and $100,000 fixed. John is considering several options. Option One: Cut the price to $70 and perhaps sell 15,000 units. Option Two: Cut the price to $60, reduce material costs by $10, and cut advertising by $60,000. Anticipated volume for this option is 10,000 units. Option Three: Cut the price to $80 and include a $10 mail-in rebate offer. It is anticipated that 15,000 units could be sold and only 30 percent of the rebate coupons would be redeemed. Option Four:  Cut the price to $60 per game and possibly sell 20,000 units.
-Refer to the figure.What is the profit per case for drugstore chains?

Accepted Answer

A) $2.15 per case 
B) $2.20 per case 
C) $2.35 per case 
D) $4.50 per case 
A) $2.15 per case 
B) $2.20 per case 
C) $2.35 per case 
D) $4.50 per case

Question 18

The table division operates as a revenue centre with the following relevant information for the current year:
 $\begin{array}{lr}
  \text {  Sales price var?ance} &\$ 2.000 \text { unfavourable }\
 \text { Sales volume variance } & \text { \$ 4,000  favourable}\
 \text { Budgeted unit contribution margin per unit } &\$12
\end{array}$
 The actual selling price was $2 less than the expected selling price and the actual number of units sold is 200 more than expected. 
a.Calculate the expected sales price.
b.Calculate the actual sales price.
c.Calculate actual unit sales.
d.Calculate expected unit sales.

Accepted Answer

EP = Expected selling price 
AP = Actual

Question 19

Anderson Company manufactures a variety of toys and games. John Boone, president, is disappointed in the sales of a new board game. The game sold only 10,000 units in the current year when 30,000 were projected. Sales for the following year look no better. At $100 per game, it is not a hot seller. Direct costs of the board game are $56 variable cost and $100,000 fixed. John is considering several options. Option One: Cut the price to $70 and perhaps sell 15,000 units. Option Two: Cut the price to $60, reduce material costs by $10, and cut advertising by $60,000. Anticipated volume for this option is 10,000 units. Option Three: Cut the price to $80 and include a $10 mail-in rebate offer. It is anticipated that 15,000 units could be sold and only 30 percent of the rebate coupons would be redeemed. Option Four:  Cut the price to $60 per game and possibly sell 20,000 units.
-Refer to the figure.What is the profit or loss from Option One?

Accepted Answer

A) $110,000 
B) $210,000 
C) $950,000 
D) ($1,050,000) 
A) $110,000 
B) $210,000 
C) $950,000 
D) ($1,050,000)

Question 20

Anderson Company manufactures a variety of toys and games. John Boone, president, is disappointed in the sales of a new board game. The game sold only 10,000 units in the current year when 30,000 were projected. Sales for the following year look no better. At $100 per game, it is not a hot seller. Direct costs of the board game are $56 variable cost and $100,000 fixed. John is considering several options. Option One: Cut the price to $70 and perhaps sell 15,000 units. Option Two: Cut the price to $60, reduce material costs by $10, and cut advertising by $60,000. Anticipated volume for this option is 10,000 units. Option Three: Cut the price to $80 and include a $10 mail-in rebate offer. It is anticipated that 15,000 units could be sold and only 30 percent of the rebate coupons would be redeemed. Option Four:  Cut the price to $60 per game and possibly sell 20,000 units.
-Refer to the figure.What is the profit or loss from Option Two?

Accepted Answer

A) $40,000 
B) ($100,000) 
C) $100,000 
D) $600,000 
A) $40,000 
B) ($100,000) 
C) $100,000 
D) $600,000

What is the formula used to calculate market share variance?

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

What is the term for charging a higher price at the beginning of a product's life cycle?

On the international market,which of the following is called dumping?

What is the primary difference between variable and absorption costing?

What are common segment costs when contrasted with direct segment costs?

What is the term for pricing a new product at a low initial price to build market share quickly?

When is net income the largest?

A: Basic Cost Management Concepts

B: Basic Cost Management Concepts

Cost Behaviour

Cost-Volume-Profit Analysis

Job-Order Costing Systems

Process Costing

Activity-Based Costing

Allocating Costs of Support Departments and Joint Products

Budgeting for Planning and Control

Standard Costing: a Functional-Based Control Approach

Responsibility Accounting,performance Evaluation,and Transfer Pricing

Tactical Decision Making

Strategic Cost Management

Activity-Based Management

The Balanced Scorecard: Strategic-Based Control

Quality and Environmental Cost Management

Lean Accounting and Productivity Measurement

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

Filters

Exam 12: Pricing and Profitability Analysis

What is the formula used to calculate market share variance?

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

What is the term for charging a higher price at the beginning of a product's life cycle?

On the international market,which of the following is called dumping?

What is the primary difference between variable and absorption costing?

What are common segment costs when contrasted with direct segment costs?

What is the term for pricing a new product at a low initial price to build market share quickly?

When is net income the largest?

A: Basic Cost Management Concepts

B: Basic Cost Management Concepts

Cost Behaviour

Cost-Volume-Profit Analysis

Job-Order Costing Systems

Process Costing

Activity-Based Costing

Allocating Costs of Support Departments and Joint Products

Budgeting for Planning and Control

Standard Costing: a Functional-Based Control Approach

Responsibility Accounting,performance Evaluation,and Transfer Pricing

Tactical Decision Making

Strategic Cost Management

Activity-Based Management

The Balanced Scorecard: Strategic-Based Control

Quality and Environmental Cost Management

Lean Accounting and Productivity Measurement

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

Filters