Exam 16: Revenue and Customer Profitability Analysis

Describe and discuss the two methods of allocating the revenues of a bundled package to the individual products in that package.Describe any special problems associated with the method.

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.

Costs incurred to process orders would MOST likely be classified as a

The sales-quantity variance is favorable when budgeted unit sales exceed actual unit sales.

Use the information below to answer the following question(s). Remote Company manufactures remote control devices for electronic equipment.The following information was collected during June: -What is the company's market-share variance?

An example of a bundled product is when a resort hotel charges a single price for lodging,food,and recreational activities.

Richard's Electronics manufactures TVs and DVDRs.During April,the following activities occurred: Required: Compute the following variances in terms of the contribution margin. a.Determine the total sales-mix variance. b.Determine the total sales-quantity variance. c.Determine the total sales-volume variance.

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 sales-mix variance for contribution margin?

Additional insight can be gained by separating the sales-mix variance into the flexible-budget variance and the sales-volume variance.

Various Product Company is a manufacturer of numerous products which are similar and are processed on the same assembly line.The production manager has decided that she will require all product managers and assembly line managers to be responsible for their own operations.The accounting information system is a large complex system that can provide specialized reporting when needed.It also has room for new,permanent applications. Required: Discuss how the production manager can expand the reporting responsibilities of these managers.

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 sales-volume variance (contribution margin)for May?

A company sells two products: radios and speakers.The expected sales for radios were 1,500 units;2,000 were sold.The budgeted selling price for radios was $15.00;however,the actual selling price was $13.00.The expected sales for speakers were 4,600 units;5,000 were sold.The budgeted selling price for speakers was $7.50;however,the actual selling price was $9.00.Budgeted and actual variable costs were $4.00 per unit for the radios and $2.00 per unit for the speakers.What is the contribution margin sales-volume variance for the period?

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

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: a.Calculate the contribution margin for the flexible budget. b.Determine the total static-budget variance,the total flexible-budget variance,and the total sales-volume variance in terms of the contribution margin.

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

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 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 sales-quantity variance?

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

Which of the following is one of the items that are important to managers when analyzing sales-volume variance information?

________ 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.