Question 1

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 2

Analyzing whether to add or drop a customer is an application of relevant costing analysis.

Accepted Answer

A) True 
 B)False

Question 3

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:
  
-What is the Zorro Company 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 4

Customer specific costs are costs that

Accepted Answer

A) are traceable to or allocated to individual customers. 
B) are not traceable to individual customers. 
C) are the same as customer support costs. 
D) would not include cost of goods sold. 
E) would not include selling-related costs. 
A) are traceable to or allocated to individual customers. 
B) are not traceable to individual customers. 
C) are the same as customer support costs. 
D) would not include cost of goods sold. 
E) would not include selling-related costs.

Question 5

An activity-based costing system may focus on customers rather than products.

Accepted Answer

A) True 
 B)False

Question 6

Give examples of bundled products for each of the following industries:
a.Resort hotel
b.Bank
c.Restaurant
d.Computer store
e.Gasoline service station/convenience store
f.Software manufacturer

Accepted Answer

a.Hotel room plus meals,free drinks,use

Question 7

Which of the following statements is TRUE?

Accepted Answer

A) The two main classes of revenue allocation methods are the step-up method and the incremental method. 
B) The stand-alone revenue allocation method ranks the individual products in a bundle and then uses this ranking to allocate the bundled revenues to these individual products. 
C) A bundled product is a package of two or more products or services,sold for multiple prices. 
D) The issues discussed with revenue tracing and sales returns apply to cost tracing. 
E) The two main classes of revenue allocation methods are the stand-alone method and the incremental method. 
A) The two main classes of revenue allocation methods are the step-up method and the incremental method. 
B) The stand-alone revenue allocation method ranks the individual products in a bundle and then uses this ranking to allocate the bundled revenues to these individual products. 
C) A bundled product is a package of two or more products or services,sold for multiple prices. 
D) The issues discussed with revenue tracing and sales returns apply to cost tracing. 
E) The two main classes of revenue allocation methods are the stand-alone method and the incremental method.

Question 8

A customer cost hierarchy categorizes costs related to customers into different cost pools on the basis of using only one cost driver.

Accepted Answer

A) True 
 B)False

Question 9

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 10

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

Accepted Answer

A) True 
 B)False

Question 11

Revenue shedding refers to the strategy of providing price discounts on a long-term basis to specific customers.

Accepted Answer

A) True 
 B)False

Question 12

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 Game A in Package 3,using selling prices as the base.

Accepted Answer

A) $34.20 
B) $30.00 
C) $25.00 
D) $22.80 
E) $19.00 
A) $34.20 
B) $30.00 
C) $25.00 
D) $22.80 
E) $19.00

Question 13

Costs incurred to handle each unit sold 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 14

Bannock Safety Equipment Ltd.operates two stores,one in Edmonton and another in Thunderbay.The following income statements were prepared for the most recent year:
   
The store equipment and leasehold improvements have no market value.The building leases can be cancelled without penalty.
Required:
a.Calculate the dollar value of sales required for each store to break-even assuming that all of the fixed costs are to be covered?
b.Should management close the Thunderbay store? Assume that corporate overhead would be reduced by $100,000 if the Thunderbay store is closed.

Accepted Answer

a.Edmonton
($84,000 + $380,000 + $750,00

Question 15

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 16

The (the difference between the actual market size in units and the budgeted market size in units)times (the budgeted market share)times (budgeted contribution margin per composite unit for the budgeted mix)is called the

Accepted Answer

A) budgeted market-size variance. 
B) budgeted market-share variance. 
C) market-share variance. 
D) market-size variance. 
E) sales quantity variance. 
A) budgeted market-size variance. 
B) budgeted market-share variance. 
C) market-share variance. 
D) market-size variance. 
E) sales quantity variance.

Question 17

Clarke Industries collects information on two customers for the past year:
   
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

The answer of Clarke Industries collects information on two customers...

Question 18

Use the information below to answer the following question(s).
Teddy Bear Company sold a total of 30,000 stuffed tigers and lions.During August the following information was gathered:
  
-What is the Teddy Bear Company total sales-quantity variance?

Accepted Answer

A) $21,600 favourable 
B) $13,750 favourable 
C) $13,750 unfavourable 
D) $4,500 favourable 
E) $4,500 unfavourable 
A) $21,600 favourable 
B) $13,750 favourable 
C) $13,750 unfavourable 
D) $4,500 favourable 
E) $4,500 unfavourable

Question 19

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 sales-volume variance (contribution margin)for Strong tea?

Accepted Answer

A) $600 favourable 
B) $600 unfavourable 
C) $900 favourable 
D) $900 unfavourable 
E) $300 unfavourable 
A) $600 favourable 
B) $600 unfavourable 
C) $900 favourable 
D) $900 unfavourable 
E) $300 unfavourable

Question 20

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

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

Analyzing whether to add or drop a customer is an application of relevant costing analysis.

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: -What is the Zorro Company market-share variance?

Customer specific costs are costs that

An activity-based costing system may focus on customers rather than products.

Give examples of bundled products for each of the following industries: a.Resort hotel b.Bank c.Restaurant d.Computer store e.Gasoline service station/convenience store f.Software manufacturer

Which of the following statements is TRUE?

A customer cost hierarchy categorizes costs related to customers into different cost pools on the basis of using only one cost driver.

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

Revenue shedding refers to the strategy of providing price discounts on a long-term basis to specific customers.

Costs incurred to handle each unit sold would MOST likely be classified as a

The sales-volume variance for revenue is the

The (the difference between the actual market size in units and the budgeted market size in units)times (the budgeted market share)times (budgeted contribution margin per composite unit for the budgeted mix)is called the

Use the information below to answer the following question(s). Teddy Bear Company sold a total of 30,000 stuffed tigers and lions.During August the following information was gathered: -What is the Teddy Bear Company total sales-quantity variance?

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

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

Analyzing whether to add or drop a customer is an application of relevant costing analysis.

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: -What is the Zorro Company market-share variance?

Customer specific costs are costs that

An activity-based costing system may focus on customers rather than products.

Give examples of bundled products for each of the following industries: a.Resort hotel b.Bank c.Restaurant d.Computer store e.Gasoline service station/convenience store f.Software manufacturer

Which of the following statements is TRUE?

A customer cost hierarchy categorizes costs related to customers into different cost pools on the basis of using only one cost driver.

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

Revenue shedding refers to the strategy of providing price discounts on a long-term basis to specific customers.

Costs incurred to handle each unit sold would MOST likely be classified as a

The sales-volume variance for revenue is the

The (the difference between the actual market size in units and the budgeted market size in units)times (the budgeted market share)times (budgeted contribution margin per composite unit for the budgeted mix)is called the

Use the information below to answer the following question(s). Teddy Bear Company sold a total of 30,000 stuffed tigers and lions.During August the following information was gathered: -What is the Teddy Bear Company total sales-quantity variance?

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