Question 1

What actions might be taken with an unprofitable customer?

Accepted Answer

An unprofitable customer might be droppe

Question 2

Any item for which a separate measurement of cost is desired is known as:

Accepted Answer

A) cost allocation 
B) a cost object 
C) a direct cost 
D) an indirect cost 
A) cost allocation 
B) a cost object 
C) a direct cost 
D) an indirect cost

Question 3

Which purpose of cost allocation is used to encourage sales representatives to push high-margin products or services?

Accepted Answer

A) to provide information for economic decisions 
B) to motivate managers and other employees 
C) to justify costs or compute reimbursement 
D) to measure income and assets for reporting to external parties 
A) to provide information for economic decisions 
B) to motivate managers and other employees 
C) to justify costs or compute reimbursement 
D) to measure income and assets for reporting to external parties

Question 4

A favorable sales-mix variance arises when the actual sales-mix percentage exceeds the budgeted sales-mix percentage.

Accepted Answer

A) True 
 B)False

Question 5

An electronics manufacturer is trying to encourage its engineers to design simpler products so that overall costs are reduced.
Required:
Which of the value-chain function costs (R&D, design, production, marketing, distribution, customer service)should be included in product-cost estimates to achieve the above purpose? Why?

Accepted Answer

All costs that are affected by

Question 6

The benefits of implementing a more-complex cost allocation system are relatively easy to quantify for application of the cost-benefit approach.

Accepted Answer

A) True 
 B)False

Question 7

Indirect costs are costs that CANNOT be traced to cost objects in an economically feasible way.

Accepted Answer

A) True 
 B)False

Question 8

The static-budget variance will be favorable when:

Accepted Answer

A) actual unit sales are less than budgeted unit sales 
B) the actual contribution margin is greater than the static-budget contribution margin 
C) the actual sales mix shifts toward the less profitable units 
D) the composite unit for the actual mix is greater than for the budgeted mix 
A) actual unit sales are less than budgeted unit sales 
B) the actual contribution margin is greater than the static-budget contribution margin 
C) the actual sales mix shifts toward the less profitable units 
D) the composite unit for the actual mix is greater than for the budgeted mix

Question 9

Answer the following questions using the information below:
Woodruff Flowering Plants provides the following information for the month of May:
  
-What is the budgeted contribution margin per composite unit for the budgeted mix?

Accepted Answer

A) $8.00 
B) $8.60 
C) $9.00 
D) $9.60 
A) $8.00 
B) $8.60 
C) $9.00 
D) $9.60

Question 10

An advantage of using a bar chart to visualize customer profitability is that:

Accepted Answer

A) differences in commissions paid to sales persons stand out 
B) loss customers stand out 
C) trends in the volume of purchases become apparent 
D) All of these answers are correct. 
A) differences in commissions paid to sales persons stand out 
B) loss customers stand out 
C) trends in the volume of purchases become apparent 
D) All of these answers are correct.

Question 11

A company might choose to allocate corporate costs to various divisions within the company for what four purposes? Give an example of each.

Accepted Answer

1. To provide information for economic d

Question 12

Which purpose of cost allocation is used to decide on the selling price for a customized product or service?

Accepted Answer

A) to provide information for economic decisions 
B) to motivate managers and other employees 
C) to justify costs or compute reimbursement 
D) to measure income and assets for reporting to external parties 
A) to provide information for economic decisions 
B) to motivate managers and other employees 
C) to justify costs or compute reimbursement 
D) to measure income and assets for reporting to external parties

Question 13

Corporate-sustaining costs are costs of activities to support individual customers, regardless of the number of units or batches of product delivered to the customer.

Accepted Answer

A) True 
 B)False

Question 14

The direct materials mix variance is the:

Accepted Answer

A) average of the direct materials mix variances for each input 
B) sum of the direct materials mix variances for each input 
C) difference between the direct materials mix variances for each input 
D) multiple of the direct materials mix variances for each input 
A) average of the direct materials mix variances for each input 
B) sum of the direct materials mix variances for each input 
C) difference between the direct materials mix variances for each input 
D) multiple of the direct materials mix variances for each input

Question 15

Answer the following questions using the information below:
The Sarasota Corporation manufactures two types of vacuum cleaners, the Victor for commercial building use and the House-Mate for residences. Budgeted and actual operating data for the year 2012 were as follows:
    
-What is the total flexible-budget variance in terms of the contribution margin?

Accepted Answer

A) $900,000 favorable 
B) $700,000 favorable 
C) $200,000 unfavorable 
D) $360,000 unfavorable 
A) $900,000 favorable 
B) $700,000 favorable 
C) $200,000 unfavorable 
D) $360,000 unfavorable

Question 16

For external reporting, inventoriable costs under GAAP sometimes include R&D costs.

Accepted Answer

A) True 
 B)False

Question 17

Allocating all corporate costs motivates division managers to examine how corporate costs are planned and controlled.

Accepted Answer

A) True 
 B)False

Question 18

When individual activities within a cost pool have a similar relationship with the cost driver, those costs:

Accepted Answer

A) need to be reallocated 
B) need multiple cost drivers 
C) are considered a homogeneous cost pool 
D) are considered an allocated cost pool 
A) need to be reallocated 
B) need multiple cost drivers 
C) are considered a homogeneous cost pool 
D) are considered an allocated cost pool

Question 19

Customer actions will LEAST affect:

Accepted Answer

A) customer output unit-level costs 
B) customer batch-level costs 
C) customer-sustaining costs 
D) distribution-channel costs 
A) customer output unit-level costs 
B) customer batch-level costs 
C) customer-sustaining costs 
D) distribution-channel costs

Question 20

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?

Accepted Answer

@#IMG-DLM& @#IMG-DLM& c. Problems in acc

What actions might be taken with an unprofitable customer?

Any item for which a separate measurement of cost is desired is known as:

Which purpose of cost allocation is used to encourage sales representatives to push high-margin products or services?

A favorable sales-mix variance arises when the actual sales-mix percentage exceeds the budgeted sales-mix percentage.

The benefits of implementing a more-complex cost allocation system are relatively easy to quantify for application of the cost-benefit approach.

Indirect costs are costs that CANNOT be traced to cost objects in an economically feasible way.

The static-budget variance will be favorable when:

Answer the following questions using the information below: Woodruff Flowering Plants provides the following information for the month of May: -What is the budgeted contribution margin per composite unit for the budgeted mix?

An advantage of using a bar chart to visualize customer profitability is that:

A company might choose to allocate corporate costs to various divisions within the company for what four purposes? Give an example of each.

Which purpose of cost allocation is used to decide on the selling price for a customized product or service?

Corporate-sustaining costs are costs of activities to support individual customers, regardless of the number of units or batches of product delivered to the customer.

The direct materials mix variance is the:

For external reporting, inventoriable costs under GAAP sometimes include R&D costs.

Allocating all corporate costs motivates division managers to examine how corporate costs are planned and controlled.

When individual activities within a cost pool have a similar relationship with the cost driver, those costs:

Customer actions will LEAST affect:

The Accountants Role in the Organization

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, Direct-Cost Variances, and Management Control

Flexible Budgets, Overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Pricing Decisions and Cost Management

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Allocation of Support-Department Costs, Common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, Rework, and Scrap

Balanced Scorecard: Quality, Time, and the Theory of Constraints

Inventory Management, Just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing, and Multinational Considerations

Performance Measurement, Compensation, and Multinational Considerations

Filters

Exam 14: Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis

What actions might be taken with an unprofitable customer?

Any item for which a separate measurement of cost is desired is known as:

Which purpose of cost allocation is used to encourage sales representatives to push high-margin products or services?

A favorable sales-mix variance arises when the actual sales-mix percentage exceeds the budgeted sales-mix percentage.

The benefits of implementing a more-complex cost allocation system are relatively easy to quantify for application of the cost-benefit approach.

Indirect costs are costs that CANNOT be traced to cost objects in an economically feasible way.

The static-budget variance will be favorable when:

Answer the following questions using the information below: Woodruff Flowering Plants provides the following information for the month of May: -What is the budgeted contribution margin per composite unit for the budgeted mix?

An advantage of using a bar chart to visualize customer profitability is that:

A company might choose to allocate corporate costs to various divisions within the company for what four purposes? Give an example of each.

Which purpose of cost allocation is used to decide on the selling price for a customized product or service?

Corporate-sustaining costs are costs of activities to support individual customers, regardless of the number of units or batches of product delivered to the customer.

The direct materials mix variance is the:

For external reporting, inventoriable costs under GAAP sometimes include R&D costs.

Allocating all corporate costs motivates division managers to examine how corporate costs are planned and controlled.

When individual activities within a cost pool have a similar relationship with the cost driver, those costs:

Customer actions will LEAST affect:

The Accountants Role in the Organization

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, Direct-Cost Variances, and Management Control

Flexible Budgets, Overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Pricing Decisions and Cost Management

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Allocation of Support-Department Costs, Common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, Rework, and Scrap

Balanced Scorecard: Quality, Time, and the Theory of Constraints

Inventory Management, Just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing, and Multinational Considerations

Performance Measurement, Compensation, and Multinational Considerations

Filters