Question 1

List at least three different levels of costs in a customer-cost hierarchy and an example of each.

Accepted Answer

List any three of the following:
1.Custo

Question 2

Clarke Industries collects information on two customers for the past year:
   Clarke estimates the following activity-based costs:
   An in-stock order is an order for which all the items included are in inventory at the time the order is received.Required:
Compute the customer specific contribution of each customer for the year using:
a.16% of revenues as the allocation rate for customer-related costs.
b.The activity-based costing approach.

Accepted Answer

a. @#IMG-DLM& Costs:

Question 3

The market-size variance is the difference between two amounts: (1)the budgeted amount at budgeted mix based on the actual market size in units and the actual market share, and (2)the budgeted amount at budgeted mix based on actual market size in units and the budgeted market share.

Accepted Answer

A) True 
 B)False

Question 4

A policy of dropping any customer that is currently unprofitable will eliminate, in the short run, all of the costs assigned to it.

Accepted Answer

A) True 
 B)False

Question 5

Max's DVD Store encounters revenue allocation decisions with its bundled product sales.Here, two or more of the DVDs are sold as a single package.Managers at Max's are keenly interested in individual product profitability figures.Information pertaining to its three bundled products and the stand-alone selling prices of its individual products is as follows:
   Required:
a.With selling prices as the weights, allocate the $25 packaged price of "All Three" to the three videos using the stand-alone revenue allocation method.
b.Allocate the $25 packaged price of "All Three" to the three types of videos using the incremental revenue allocation method.Assume New Releases is the primary product, followed by Older Releases, and then Classics.

Accepted Answer

a.New $15 + Older $1

Question 6

Comment on why marketing managers generally find the market-share variance is more controllable than the market- size variance.

Accepted Answer

Marketing managers generally find the ma

Question 7

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:
  
-If the market-size variance is $400 U and the sales-mix variance is $700 F, and the market share variance is $300 F, we know that which of the following is TRUE?

Accepted Answer

A) The sales-quantity variance is $100 F. 
B) The market-share variance is $300 F. 
C) The sales-quantity variance is $100 U, and the sales volume variance is $600 F. 
D) The sales-volume variance is $600 U. 
E) The sales-volume variance is $600 F, and the sales-quantity variance is $100 F. 
A) The sales-quantity variance is $100 F. 
B) The market-share variance is $300 F. 
C) The sales-quantity variance is $100 U, and the sales volume variance is $600 F. 
D) The sales-volume variance is $600 U. 
E) The sales-volume variance is $600 F, and the sales-quantity variance is $100 F.

Question 8

The Omega 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 are 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 300,000 units, but actual industry volume was only 275,000 units.Required:
Compute the market-share variance and market-size variance in terms of the contribution margin.

Accepted Answer

@#IMG-DLM& @#IMG-DLM& Budgeted contribut

Question 9

The sales-quantity variance can be unfavourable if both the market-share and market-size variances are favourable.

Accepted Answer

A) True 
 B)False

Question 10

Customer-specific costs are costs that are traceable or allocated to individual customers.

Accepted Answer

A) True 
 B)False

Question 11

Revenue allocation occurs where revenues can be identified with an individual product (service, customer, and so on)in an economically feasible (cost-effective)way.

Accepted Answer

A) True 
 B)False

Question 12

The sales-volume variance for revenue is the

Accepted Answer

A) (actual sales quantity in units divided by budgeted individual product selling price per unit)times (budgeted sales quantity in units). 
B) (budgeted contribution margin per unit)times (actual unit sales plus static budget unit sales). 
C) (actual sales quantity in units plus budgeted sales quantity in units)divided by (budgeted individual product selling price per unit). 
D) (budgeted sales quantity in units divided by budgeted individual selling price per unit)times (actual sales quantity in units). 
E) (budgeted individual product selling price per unit)times (actual sales quantity in units less budgeted sales quantity in units). 
A) (actual sales quantity in units divided by budgeted individual product selling price per unit)times (budgeted sales quantity in units). 
B) (budgeted contribution margin per unit)times (actual unit sales plus static budget unit sales). 
C) (actual sales quantity in units plus budgeted sales quantity in units)divided by (budgeted individual product selling price per unit). 
D) (budgeted sales quantity in units divided by budgeted individual selling price per unit)times (actual sales quantity in units). 
E) (budgeted individual product selling price per unit)times (actual sales quantity in units less budgeted sales quantity in units).

Question 13

The ranking of products with regard to the incremental revenue allocation method can only be done by top management.

Accepted Answer

A) True 
 B)False

Question 14

Under the incremental revenue allocation method, there is an incentive to be the first-ranked user.

Accepted Answer

A) True 
 B)False

Question 15

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 stand-alone product revenues as the weight for revenue allocation, what amount will be allocated to the refrigerator?

Accepted Answer

A) $687.50 
B) $612.50 
C) $625.00 
D) $825.00 
E) $505.31 
A) $687.50 
B) $612.50 
C) $625.00 
D) $825.00 
E) $505.31

Question 16

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 stand-alone method with selling price as the weight for revenue allocation, what amount of revenue will be allocated to Reading Fun in the first package (Reading Fun & Math Fun)?

Accepted Answer

A) $40 
B) $44 
C) $38 
D) $50 
E) $22 
A) $40 
B) $44 
C) $38 
D) $50 
E) $22

Question 17

A favorable total sales-mix variance arises when the actual sales-mix percentage for the higher contribution margin products is less than the budgeted sales-mix percentage.

Accepted Answer

A) True 
 B)False

Question 18

Some companies place more emphasis on the market-share variance than the market-size variance when evaluating their managers.

Accepted Answer

A) True 
 B)False

Question 19

The data for a paint manufacturing company for February are as follows:
   Price discount policy:
$0.25 discount per gallon in excess of 20,000 gallons (up to 40,000)
$0.35 discount per gallon in excess of 40,000 gallons
Required:
Prepare a report showing the customer-specific contribution.Present one column for customer-specific contribution and a second column showing customer-specific contribution as a percentage of customer revenue net of

Accepted Answer

@#IMG-DLM& Customer 1 (20 × $9)+ (20 × $8.75)+ (10

Question 20

Customer retention likelihood is a qualitative customer value assessment.

Accepted Answer

A) True 
 B)False

List at least three different levels of costs in a customer-cost hierarchy and an example of each.

The market-size variance is the difference between two amounts: (1)the budgeted amount at budgeted mix based on the actual market size in units and the actual market share, and (2)the budgeted amount at budgeted mix based on actual market size in units and the budgeted market share.

A policy of dropping any customer that is currently unprofitable will eliminate, in the short run, all of the costs assigned to it.

Comment on why marketing managers generally find the market-share variance is more controllable than the market- size variance.

The sales-quantity variance can be unfavourable if both the market-share and market-size variances are favourable.

Customer-specific costs are costs that are traceable or allocated to individual customers.

Revenue allocation occurs where revenues can be identified with an individual product (service, customer, and so on)in an economically feasible (cost-effective)way.

The sales-volume variance for revenue is the

The ranking of products with regard to the incremental revenue allocation method can only be done by top management.

Under the incremental revenue allocation method, there is an incentive to be the first-ranked user.

A favorable total sales-mix variance arises when the actual sales-mix percentage for the higher contribution margin products is less than the budgeted sales-mix percentage.

Some companies place more emphasis on the market-share variance than the market-size variance when evaluating their managers.

Customer retention likelihood is a qualitative customer value assessment.

The Accountants Vital Role in Decision Making

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Management

Master Budget and Responsibility Accounting

Flexible Budgets, Variances, and Management Control: I

Flexible Budgets, Variances, and Management Control: II

Income Effects of Denominator Level on Inventory Valuation

Analysis of Cost Behaviour

Decision Making and Relevant Information

Pricing Decisions, Product Profitability Decisions, and Cost Management

Strategy, Balanced Scorecard, and Profitability Analysis

Period Cost Allocation

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, Rework, and Scrap

Inventory Cost Management Strategies

Capital Budgeting: Methods of Investment Analysis

Transfer Pricing and Multinational Management Control Systems

Multinational Performance Measurement and Compensation

Filters

Exam 16: Revenue and Customer Profitability Analysis

List at least three different levels of costs in a customer-cost hierarchy and an example of each.

The market-size variance is the difference between two amounts: (1)the budgeted amount at budgeted mix based on the actual market size in units and the actual market share, and (2)the budgeted amount at budgeted mix based on actual market size in units and the budgeted market share.

A policy of dropping any customer that is currently unprofitable will eliminate, in the short run, all of the costs assigned to it.

Comment on why marketing managers generally find the market-share variance is more controllable than the market- size variance.

The sales-quantity variance can be unfavourable if both the market-share and market-size variances are favourable.

Customer-specific costs are costs that are traceable or allocated to individual customers.

Revenue allocation occurs where revenues can be identified with an individual product (service, customer, and so on)in an economically feasible (cost-effective)way.

The sales-volume variance for revenue is the

The ranking of products with regard to the incremental revenue allocation method can only be done by top management.

Under the incremental revenue allocation method, there is an incentive to be the first-ranked user.

A favorable total sales-mix variance arises when the actual sales-mix percentage for the higher contribution margin products is less than the budgeted sales-mix percentage.

Some companies place more emphasis on the market-share variance than the market-size variance when evaluating their managers.

Customer retention likelihood is a qualitative customer value assessment.

The Accountants Vital Role in Decision Making

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Management

Master Budget and Responsibility Accounting

Flexible Budgets, Variances, and Management Control: I

Flexible Budgets, Variances, and Management Control: II

Income Effects of Denominator Level on Inventory Valuation

Analysis of Cost Behaviour

Decision Making and Relevant Information

Pricing Decisions, Product Profitability Decisions, and Cost Management

Strategy, Balanced Scorecard, and Profitability Analysis

Period Cost Allocation

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, Rework, and Scrap

Inventory Cost Management Strategies

Capital Budgeting: Methods of Investment Analysis

Transfer Pricing and Multinational Management Control Systems

Multinational Performance Measurement and Compensation

Filters