Exam 16: Revenue and Customer Profitability Analysis

When allocating the revenues between a bundled product offering, there are only two methods which can be used: 1)the stand-alone revenue-method and 2)the incremental revenue-allocation method.

Lynnwood 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 Enbright and Jackson are $280,000 and $148,000 respectively.The cost of goods sold on these sales are the same at 52%.Required: Using Customer ABC Analysis, analyze the relative profitability of Enbright and Jackson.

Richard's Electronics manufactures TVs and DVDRs.During April, the following activities occurred: Required: Compute the following variances in terms of the contribution margin.a.Determine the total sales-mix variance. b.Determine the total sales-quantity variance. c.Determine the total sales-volume variance.

________ ranks the individual products in a bundle and then uses this ranking to allocate the bundled revenues to these individual products.

What actions might be taken with an unprofitable customer?

The first-ranked product is termed the incremental product in the incremental revenue-allocation method.

Use the information below to answer the following question(s).Teddy Bear Company sold a total of 30,000 stuffed tigers and lions.During August the following information was gathered: -A company sells three different types of satellite dishes in Ontario, but sells only (type 1)in Alberta.Available data are that the budgeted sales mix percentage in Ontario is .35 (type 1), and .25 (type 2).The contribution margins per unit are $200 (1), $120 (2), and $140(3).Required: Calculate the budgeted contribution margin per composite unit for the budgeted mix for Ontario and Alberta respectively.

A bundled product is a package of two or more products or services, sold for a single price, where the individual components of the bundle may also be sold as separate items, each with their own stand-alone prices.

Use the information below to answer the following question(s).Special Tea Products (STP)has an exclusive contract with Tea Distributors.Two brands of Teas are imported, Strong and Mild, and sold to retail outlets.The monthly budget for the contract is based on a combination of last year's performance, a forecast of general industry sales, and the company's expected share of the Canadian market for imported Tea.The following information is provided for the month of May: Budgeted fixed costs are $1,750.Actual fixed costs are $2,000. -What is the STP total flexible-budget variance for revenues?

Bob's Appliances manufactures industrial dryers and washers.During February the following data are available: Required: Determine the following: a.Sales-mix and sales-quantity variances b.Market-share and market-size variances (for calculation purposes round combined actual and budgeted market share percentages to six decimal places.)

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 past year are: The industry volume for residential and office chairs of the type sold by the Chair company had been estimated at 2,400,000.Actual industry volume for the year was 2,200,000 chairs.Required: a.Compute the sale-mix variance and the sales- quantity variance by type of chair, and in total. b.Compute the market-share variance and market-size variances.(Calculate actual and budgeted market share percentages to two decimal places.)

Answer the following question(s)using the information below: Zorro Company manufactures remote control devices for garage doors.The following information was collected during June: -What is the Zorro Company market-share variance?

Handy-Man Services is a repair-service company specializing in small household jobs.Each client pays a fixed monthly service fee based on the number of rooms in the house.Records are kept on the time and material costs used for each repair.The following profitability data apply to five customers: Required: a.Compute the operating income for each of the five customers. b.What options should Handy-Man Services consider in light of the customer-profitability results? c.What problems might Handy-Man Services encounter in accurately estimating the operating costs of each customer?

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 flexible-budget variance in terms of the contribution margin?

Use the information below to answer the following question(s).Remote Company manufactures remote control devices for electronic equipment.The following information was collected during June: -What is the company's market-size variance?

If one of four distribution channels is discontinued, corporate-sustaining costs such as general administration costs will most likely be reduced by 25%.

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 manufacturing cost per unit as the weight for revenue allocation, what amount will be allocated to the refrigerator?

________ 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.

ABC systems use the concept of a ________ to identify the cost drivers that best demonstrate the cause-and-effect relationship between each activity and the costs in the related cost pool.

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 total sales-mix variance in terms of the contribution margin?