Question 1

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

Accepted Answer

A) True 
 B)False  True

Question 2

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

a.

Question 3

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?

Accepted Answer

A) $220,000 favorable 
B) $340,000 favorable 
C) $556,000 favorable 
D) $896,000 favorable 
A) $220,000 favorable 
B) $340,000 favorable 
C) $556,000 favorable 
D) $896,000 favorable B

Question 4

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 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 5

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

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

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

Question 7

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 8

Harry's Electronics manufactures electronic parts.Data for two of the company's customers is as follows:
   
Required:
Prepare a comparative income statement in gross margin format with one column for each customer.Present customer-specific costs as period expenses.

Accepted Answer

The answer of Harry's Electronics manufactures electronic parts.Data for two...

Question 9

Which of the following is not a sales related variance?

Accepted Answer

A) sales-volume variance 
B) sales-quantity variance 
C) market-size variance 
D) direct materials yield variance 
E) market-share variance 
A) sales-volume variance 
B) sales-quantity variance 
C) market-size variance 
D) direct materials yield variance 
E) market-share variance

Question 10

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?

Accepted Answer

A) $500.00 
B) $612.50 
C) $620.00 
D) $775.00 
E) $687.50 
A) $500.00 
B) $612.50 
C) $620.00 
D) $775.00 
E) $687.50

Question 11

The cost of the manager of a retail distribution channel would MOST likely be classified as a

Accepted Answer

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

Question 12

Allocated corporate costs are irrelevant when analyzing whether to drop a customer.

Accepted Answer

A) True 
 B)False

Question 13

To more accurately assess customer profitability,corporate-sustaining costs should be allocated.

Accepted Answer

A) True 
 B)False

Question 14

Customer profitability analysis is used by companies to identify the most valuable customers.
Required:
a.What are some of the metrics that can be used to assess customer profitability?
b.What are some of the challenges companies face in customer profitability analysis?
c.What are some of the ethical issues raised by customer profitability analysis?

Accepted Answer

This is intended to be an open-ended que

Question 15

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 static-budget variance for revenues?

Accepted Answer

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

Question 16

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 17

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:
   
Required:
Compute the sales-mix variance and the sales-quantity variance by type of vacuum cleaner,and in total.(in terms of the contribution margin)

Accepted Answer

Budgeted sales-mix percentage:
ZENITH =

Question 18

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

Accepted Answer

a.total SP = $450 + $250 + $200 = $900
T

Question 19

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 selling prices as the base.

Accepted Answer

A) $14.00 
B) $20.00 
C) $30.00 
D) $25.00 
E) $35.00 
A) $14.00 
B) $20.00 
C) $30.00 
D) $25.00 
E) $35.00

Question 20

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?

Accepted Answer

A) $2,250 U 
B) $2,250 F 
C) $900 U 
D) $1,350 F 
E) $1,350 U 
A) $2,250 U 
B) $2,250 F 
C) $900 U 
D) $1,350 F 
E) $1,350 U

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

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

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

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

Harry's Electronics manufactures electronic parts.Data for two of the company's customers is as follows: Required: Prepare a comparative income statement in gross margin format with one column for each customer.Present customer-specific costs as period expenses.

Which of the following is not a sales related variance?

The cost of the manager of a retail distribution channel would MOST likely be classified as a

Allocated corporate costs are irrelevant when analyzing whether to drop a customer.

To more accurately assess customer profitability,corporate-sustaining costs should be allocated.

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

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

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

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

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

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

Harry's Electronics manufactures electronic parts.Data for two of the company's customers is as follows: Required: Prepare a comparative income statement in gross margin format with one column for each customer.Present customer-specific costs as period expenses.

Which of the following is not a sales related variance?

The cost of the manager of a retail distribution channel would MOST likely be classified as a

Allocated corporate costs are irrelevant when analyzing whether to drop a customer.

To more accurately assess customer profitability,corporate-sustaining costs should be allocated.

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

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