Question 1

The president's salary, interest on corporate debt and corporate donations are all examples of what type of costs?

Accepted Answer

A)  customer support costs 
B)  corporate sustaining costs 
C)  customer specific costs 
D)  distribution channel costs 
E)  sales costs 
A)  customer support costs 
B)  corporate sustaining costs 
C)  customer specific costs 
D)  distribution channel costs 
E)  sales costs

Question 2

Software For You encounters revenue-allocation decisions with its bundled product sales. Here, 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.

Accepted Answer

WP [(18 / 63) × 380

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A)  Customer-profitability analysis 
B)  Customer revenue analysis 
C)  Customer-cost hierarchy 
D)  Price discounting 
E)  Customer-price hierarchy 
A)  Customer-profitability analysis 
B)  Customer revenue analysis 
C)  Customer-cost hierarchy 
D)  Price discounting 
E)  Customer-price hierarchy

Question 5

Answer the following questions 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?

Accepted Answer

A)  $48.25 
B)  $60.00 
C)  $45.60 
D)  $50.67 
E)  $90.00 
A)  $48.25 
B)  $60.00 
C)  $45.60 
D)  $50.67 
E)  $90.00

Question 6

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

Accepted Answer

A)  $1,000 F 
B)  $1,100 F 
C)  $500 U 
D)  $1,500 U 
E)  $1,000 U 
A)  $1,000 F 
B)  $1,100 F 
C)  $500 U 
D)  $1,500 U 
E)  $1,000 U

Question 7

If the market-size variance is $650 F, the sales-mix variance is $500 F, the flexible budget variance is $9,250 F, and the static budget variance is $8,000 U, which of the following is true?

Accepted Answer

A)  The market share variance is $18,400 U. 
B)  The sales volume variance is $17,250 F. 
C)  The sales-quantity variance is $18,400 U. 
D)  The sales volume variance is $17,750 U. 
E)  The market share variance is $17,250 U. 
A)  The market share variance is $18,400 U. 
B)  The sales volume variance is $17,250 F. 
C)  The sales-quantity variance is $18,400 U. 
D)  The sales volume variance is $17,750 U. 
E)  The market share variance is $17,250 U.

Question 8

The stand-alone revenue allocation method pertains to products that cannot be bundled together.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A)  The stand-alone revenue allocation method 
B)  The averaging approach 
C)  The incremental revenue-allocation method 
D)  The joint production costing method 
E)  The weighted averaging approach 
A)  The stand-alone revenue allocation method 
B)  The averaging approach 
C)  The incremental revenue-allocation method 
D)  The joint production costing method 
E)  The weighted averaging approach

Question 11

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

Accepted Answer

A)  A revenue product 
B)  A byproduct 
C)  A bundled product 
D)  A joint product 
E)  A product package 
A)  A revenue product 
B)  A byproduct 
C)  A bundled product 
D)  A joint product 
E)  A product package

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Which item is NOT a category in the customer cost hierarchy?

Accepted Answer

A)  customer output unit-level costs 
B)  customer batch-level costs 
C)  distribution-channel costs 
D)  corporate-sustaining costs 
E)  product-sustaining cost 
A)  customer output unit-level costs 
B)  customer batch-level costs 
C)  distribution-channel costs 
D)  corporate-sustaining costs 
E)  product-sustaining cost

Question 14

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?

Accepted Answer

A)  $50 favourable 
B)  $50 unfavourable 
C)  $900 favourable 
D)  $800 favourable 
E)  $250 unfavourable 
A)  $50 favourable 
B)  $50 unfavourable 
C)  $900 favourable 
D)  $800 favourable 
E)  $250 unfavourable

Question 15

A favorable market-size variance results with a decrease in market size.

Accepted Answer

A) True 
 B)False

Question 16

The sales-quantity variance arises because

Accepted Answer

A)  the mix of individual products actually sold differs from the budgeted mix. 
B)  the total quantity of units actually sold differs from the static budget. 
C)  the total quantity of units expected to be sold differs from the static budget. 
D)  the mix of budgeted products sold differs from the actual product mix. 
E)  the budgeted sales in units cannot be achieved unless the price is decreased 
A)  the mix of individual products actually sold differs from the budgeted mix. 
B)  the total quantity of units actually sold differs from the static budget. 
C)  the total quantity of units expected to be sold differs from the static budget. 
D)  the mix of budgeted products sold differs from the actual product mix. 
E)  the budgeted sales in units cannot be achieved unless the price is decreased

Question 17

Which of the following statements is true?

Accepted Answer

A)  Joint product allocation results in more accurate assignment of revenues to products than does revenue allocation. 
B)  Revenue allocation results in more accurate assignment of revenues to products than does revenue tracing. 
C)  Revenue tracing results in more accurate assignment of revenues to products than does revenue allocation. 
D)  Revenue allocation results in more accurate assignment of revenues to products than does joint product allocation. 
E)  Joint product allocation results in more accurate assignment of revenues to products than does revenue tracing. 
A)  Joint product allocation results in more accurate assignment of revenues to products than does revenue allocation. 
B)  Revenue allocation results in more accurate assignment of revenues to products than does revenue tracing. 
C)  Revenue tracing results in more accurate assignment of revenues to products than does revenue allocation. 
D)  Revenue allocation results in more accurate assignment of revenues to products than does joint product allocation. 
E)  Joint product allocation results in more accurate assignment of revenues to products than does revenue tracing.

Question 18

Which of the following actually calculates the sales-quantity variance?

Accepted Answer

A)  (actual units of all products sold) times (actual sales mix percentage minus budgeted sales mix percentage) times (budgeted contribution margin per unit) 
B)  (actual sales quantity in units minus static-budget sales quantity in units) times (budgeted contribution margin per unit) 
C)  (actual units of all products sold minus budgeted units of all products sold) times (budgeted sales-mix percentage) times (budgeted contribution margin per unit) 
D)  (actual units of all products sold minus budgeted units of all products sold) times (budgeted sales-mix percentage) times (actual contribution margin per unit) 
E)  (actual units of all products sold) times (actual sales mix percentage minus budgeted sales mix percentage) times (actual contribution margin per unit) 
A)  (actual units of all products sold) times (actual sales mix percentage minus budgeted sales mix percentage) times (budgeted contribution margin per unit) 
B)  (actual sales quantity in units minus static-budget sales quantity in units) times (budgeted contribution margin per unit) 
C)  (actual units of all products sold minus budgeted units of all products sold) times (budgeted sales-mix percentage) times (budgeted contribution margin per unit) 
D)  (actual units of all products sold minus budgeted units of all products sold) times (budgeted sales-mix percentage) times (actual contribution margin per unit) 
E)  (actual units of all products sold) times (actual sales mix percentage minus budgeted sales mix percentage) times (actual contribution margin per unit)

Question 19

To give more weight to the product that most likely drives the sales of the bundled product, the revenue allocation should be weighted using

Accepted Answer

A)  selling prices. 
B)  unit costs. 
C)  physical units. 
D)  stand-alone product revenues. 
E)  total product costs. 
A)  selling prices. 
B)  unit costs. 
C)  physical units. 
D)  stand-alone product revenues. 
E)  total product costs.

Question 20

The static-budget variance for revenues is the difference between the actual revenues and the budgeted revenues from the static budget.

Accepted Answer

A) True 
 B)False

Exam 16: Revenue and Customer Profitability Analysis

The president's salary, interest on corporate debt and corporate donations are all examples of what type of costs?

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

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

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

If the market-size variance is $650 F, the sales-mix variance is $500 F, the flexible budget variance is $9,250 F, and the static budget variance is $8,000 U, which of the following is true?

The stand-alone revenue allocation method pertains to products that cannot be bundled together.

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

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

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

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

Which item is NOT a category in the customer cost hierarchy?

A favorable market-size variance results with a decrease in market size.

The sales-quantity variance arises because

Which of the following statements is true?

Which of the following actually calculates the sales-quantity variance?

To give more weight to the product that most likely drives the sales of the bundled product, the revenue allocation should be weighted using

The static-budget variance for revenues is the difference between the actual revenues and the budgeted revenues from the static budget.

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

Quantitative Analyses of Cost Functions

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

Cost Management: Quality, Time, and the Theory of Constraints

Inventory Cost Management Strategies

Capital Budgeting: Methods of Investment Analysis

Capital Budgeting: a Closer Look

Transfer Pricing and Multinational Management Control Systems

Multinational Performance Measurement and Compensation

Filters