Exam 16: Revenue and Customer Profitability Analysis

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 for Game A in Package 1, using unit costs as the base.

Green Coffee Inc.sells two types of coffee, Dark Roast and Light Roast.The monthly budget for Canadian coffee sales is based on a combination of last year's performance, a forecast of industry sales, and the company's expected share of the Canadian market.The following information is provided for March: Budgeted fixed costs are $70,000.Actual fixed costs are $76,000.Required: Calculate the static-budget, flexible-budget and sales-volume variances for the contribution margin, for the company for March.

It is most appropriate to base revenue allocation on the number of physical units when individual products in the bundle are of unequal value.

________ examine(s)how customers differ in their profitability.

A composite unit is a hypothetical unit with weights based on the mix of individual units.

________ uses product specific information pertaining to products in the bundle to determine the weights used to allocate the bundled revenues to those individual products.

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 static budget variance (contribution margin)for Mild Tea?

Weston Photography Ltd.sells cameras and related equipment.It often packages these into bundles for sale to consumers.Currently it is offering the following "package" deal: a camera; a photo printer; and, a camera accessory pack that includes battery recharger, case and various lens adapters.The package deal is selling for $690.The individual prices and costs of these components are as follows: Required: Allocate the revenue among the products under each of the following: a.Unit selling prices b.Unit costs c.Physical units

Easton Photography Ltd.sells cameras and related equipment.It often packages these into bundles for sale to consumers.Currently it is offering the following "package" deal: a camera; a photo printer; and, a camera accessory pack that includes battery recharger, case and various lens adapters.The package deal is selling for $740.The individual prices and costs of these components are as follows: Required: Allocate the revenue among the products under each of the following: a.Unit selling prices b.Unit costs c.Physical units

The cost of visiting customers would MOST likely be classified as a

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 sales-mix variance in terms of the contribution margin?

The sales-mix variance is the difference between two amounts: (1)the budgeted amount based on actual quantities sold of all products and the budgeted mix, and (2)the amount in the static budget.

The stand-alone method may use selling price or unit costs to allocate revenues.

Revenue allocation is required to determine the profitability of individual items within a bundled product.

The cost of visiting customers is an example of a customer output unit-level cost.

Answer the following questions using the information below: Buzz'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: -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)?

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 contribution margin for the flexible budget?

The sales-volume variance is favourable assuming the sales-mix variance and the sales-quantity variances are favourable.

Manny'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 cost as the weights, allocate the $17 packaged price of "New & Classics" using the stand-alone revenue allocation method.

Why would businesses want to sell bundled products? What benefits, if any, are there for the consumer?