Exam 16: Revenue and Customer Profitability Analysis

A company sells three different types of satellite dishes in Ontario,but sells only (type 1)in Alberta.Available data are that the budgeted sales mix percentage in Ontario is .35 (type 1),and .25 (type 2).The contribution margins per unit are $200 (1),$120 (2),and $140(3). Required: Calculate the budgeted contribution margin per composite unit for the budgeted mix for Ontario and Alberta respectively.

A customer cost hierarchy may include distribution-channel costs.

Boxwood Ltd.is reviewing two of its customers using ABC analysis.It has identified the following customer related activities and their rates: The company has the following information regarding Enbright Ltd.and Jackson Inc.: Sales for Ecobright and Samson are $285,000 and $146,000 respectively.The cost of goods sold on these sales are the same at 48%. Required: Using Customer ABC Analysis,analyze the relative profitability of Ecobright and Samson.

Customer-specific costs are costs that are traceable or allocated to individual customers.

Customer retention likelihood is a qualitative customer value assessment.

If one of four distribution channels is discontinued,corporate-sustaining costs such as general administration costs will most likely be reduced by 25%.

If the market-size variance is $400 U and the sales-mix variance is $700 F,and the market share variance is $300 F,we know that which of the following is TRUE?

Software For You encounters revenue allocation decisions with its bundled product sales.Two or more units of the software 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 selling prices of its individual products is as follows: Required: a.Using the stand-alone revenue allocation method,allocate the $380 packaged price of "All Three" to the three software products 1.with selling prices as the weights. 2.based on physical units. b.Allocate the $380 packaged price of "All Three" to the three software products using the incremental revenue allocation method.Assume Word Processing is the primary product,followed by Spreadsheet,and then Accounting Software.

ABC systems use the concept of a ________ to identify the cost drivers that best demonstrate the cause-and-effect relationship between each activity and the costs in the related cost pool.

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-volume variance in terms of the contribution margin?

Revenue allocation occurs where revenues can be identified with an individual product (service,customer,and so on)in an economically feasible (cost-effective)way.

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

The sales-volume variance plus or minus the static budget amount results in

Max's DVD Store encounters revenue allocation decisions with its bundled product sales.Here,two or more of the DVDs are sold as a single package.Managers at Max's are keenly interested in individual product profitability figures.Information pertaining to its three bundled products and the stand-alone selling prices of its individual products is as follows: Required: a.With selling prices as the weights,allocate the $25 packaged price of "All Three" to the three videos using the stand-alone revenue allocation method. b.Allocate the $25 packaged price of "All Three" to the three types of videos using the incremental revenue allocation method.Assume New Releases is the primary product,followed by Older Releases,and then Classics.

Metal Cabinet Company manufactures two and four drawer filing cabinets.The actual units sold (5,000)equalled the expected units to be sold for both products.The four drawer cabinets constitute 66 percent of the budgeted sales mix.The budgeted selling price is $30 for four drawer cabinets and $15 for two drawer cabinets.What is the sales-quantity variance?

Manny's DVD Store encounters revenue allocation decisions with its bundled product sales.Here,two or more of the DVDs are sold as a single package.Managers at Max's are keenly interested in individual product profitability figures.Information pertaining to its three bundled products and the stand-alone selling prices of its individual products is as follows: Required: a.With cost as the weights,allocate the $17 packaged price of "New & Classics" using the stand-alone revenue allocation method. b.Allocate the $17 packaged price of "New & Classics" using the incremental revenue allocation method.Assume New Releases is the primary product,followed by Older Releases,and then Classics.

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

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-size variance?

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 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)?

Which of the following is NOT a factor that managers should consider in deciding how to allocate resources across customers?