Exam 16: Revenue and Customer Profitability Analysis

Answer the following question(s)using the information below: Elmo's Educational Software Outlet sells two or more of the video games as a single package.Managers are keenly interested in individual product profitability figures.Information pertaining to three bundled products and the stand-alone prices is as follows: Assume Reading Fun is the primary product, followed by Math Fun, and then Analysis. -Using the incremental method, what amount of revenue will be allocated to Math Fun in the package that contains all three products?

The difference between (the budgeted contribution margin for the budgeted sales mix and budgeted volume)and (the budgeted contribution margin for the budgeted sales mix and the actual volume)is the

Fresh Bread Company sells a special mix of wheat bread.If the expected output equals the actual output, the sales-volume variance

Ascent Ltd.is a company that manufactures climbing rope for mountaineering and rescue operations.They sell various types of rope to four distributors: Alpine Adventures Corporation (AAC), Mountain Supply Coop (MSC), Bigfoot Safety Supply Ltd.(BSS), Elite Mountain Equipment (EME).Currently Ascent Ltd.does not charge extra fees for any order and delivery related costs.The company president, Rolf Resche, wants an ABC customer analysis done to determine if a change in pricing policy is warranted.The customer-level cost driver rates are: Rope costs $2 per metre to produce; and, sells for an average price of $3 per metre in units of 100 metres.The following table presents customer metrics: Required: Prepare a customer profitability report for the president using ABC analysis.Present the profit as a percentage of sales for each customer at the end of the report.

Answer the following question(s)using the information below: The Appliance Store sells a refrigerator and a freezer as a single package for $1,000.Other data are in the chart below. -Using the stand-alone method with physical units as the weight for revenue allocation, what amount will be allocated to the refrigerator?

Software For You encounters revenue allocation decisions with its bundled product sales.Two or more of the programs are sold as a single package.Managers at Software For You are keenly interested in individual product profitability figures.Information pertaining to its three bundled products and the stand-alone prices of its individual products is as follows: The unit inventory costs is $18, $20, and $25 for WP, SS, and AS, respectively.Assume AS is the primary product, followed by SS, then WP.Required: Allocate the bundle revenue to each product in Package C, using inventory unit costs as the weighting factor.

Answer the following questions using the information below: The Sasita Corporation manufactures two types of vacuum cleaners, the Zenith for commercial building use and the House-Helper for residences.Budgeted and actual operating data for the year 2019 were as follows: Prior to the beginning of the year, a consulting firm estimated the total volume for vacuum cleaners of the Zenith and House-Helper category to be 250,000 units, but actual industry volume was 256,000 units. -What is the total static-budget variance in terms of the contribution margin?

In general, distribution-channel costs are more easily influenced by customer actions than customer batch-level costs.

Unfavourable variances reveal not only what occurred but how it occurred.

A sporting goods division sells two types of juvenile skates; Atom and Mite.The following data are from the division's August results.Actual sales were 1,600 items, and the budget was 2,200 items. Variable costs per unit (pair)were budgeted at $56 for the Atom skates, and $119,350 in total.Required: Compute the sale-mix variance by type of skate, and in total.

Use the information below to answer the following question(s).John's Video Game Outlet encounters revenue-allocation decisions with its bundled product sales.Here, two or more of the video games are sold as a single package.Managers at John's are keenly interested in individual product-profitability figures.Information pertaining to its three bundled products and the stand-alone prices of its individual products is as follows: The unit manufacturing costs are $3.60, $4.00, and $5.00 for games A, B, and C, respectively. -Calculate the allocation of packaged price Game A in Package 3, using selling prices as the base.

The market-share variance is caused solely by the actual market share being different than the budgeted market share.

The stand-alone revenue allocation method is a weighted-average method.

Boxwood Ltd.is reviewing two of its customers using ABC analysis.It has identified the following customer related activities and their rates: The company has the following information regarding Enbright Ltd.and Jackson Inc.: Sales for Ecobright and Samson are $285,000 and $146,000 respectively.The cost of goods sold on these sales are the same at 48%.Required: Using Customer ABC Analysis, analyze the relative profitability of Ecobright and Samson.

Customer-profitability analysis examines how individual customers, or groupings of customers, differ in their profitability.

Answer the following questions using the information below: The XTRA Appliance Manufacturing Corporation manufactures two vacuum cleaners, the Standard and the Super.The following information was gathered about the two products: -What is the budgeted sales-mix percentage for the Standard and the Super vacuum cleaners, respectively?

Answer the following questions using the information below: The Sasita Corporation manufactures two types of vacuum cleaners, the Zenith for commercial building use and the House-Helper for residences.Budgeted and actual operating data for the year 2019 were as follows: Prior to the beginning of the year, a consulting firm estimated the total volume for vacuum cleaners of the Zenith and House-Helper category to be 250,000 units, but actual industry volume was 256,000 units. -What is the market-share variance?

Answer the following questions using the information below: The Sasita Corporation manufactures two types of vacuum cleaners, the Zenith for commercial building use and the House-Helper for residences.Budgeted and actual operating data for the year 2019 were as follows: Prior to the beginning of the year, a consulting firm estimated the total volume for vacuum cleaners of the Zenith and House-Helper category to be 250,000 units, but actual industry volume was 256,000 units. -Big Products sells only one product.Last year it sold 22,000 items when the budget was 16,000 items.The increased sales were due in part to reduced selling prices averaging $52.The budgeted selling price was $60.Total variable costs were budgeted at $144,000.Required: Compute the contribution margin sales-volume variance.Why doesn't the contribution sales volume variance equal the difference between budgeted and actual revenue?

A company sells two products: radios and speakers.The expected sales for radios were 1,500 units; 2,000 were sold.The budgeted selling price for radios was $15.00; however, the actual selling price was $13.00.The expected sales for speakers were 4,600 units; 5,000 were sold.The budgeted selling price for speakers was $7.50; however, the actual selling price was $9.00.Budgeted and actual variable costs were $4.00 per unit for the radios and $2.00 per unit for the speakers.What is the contribution margin sales-volume variance for the period?

A difficulty with the market-share and market-size variances is that accurate measures of market share and market size often do not exist.