Exam 16: Revenue and Customer Profitability Analysis

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: Prior to the beginning of the year,a consulting firm estimated the total volume for vacuum cleaners of the Zenith and House-Helper category to be 300,000 units,but actual industry volume was only 275,000 units. Required: Compute the market-share variance and market-size variance in terms of the contribution margin.

Under the stand-alone method,which weights better capture the benefits received by customers who purchase a bundled product?

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 Math Fun in the package that contains all three products?

A customer cost hierarchy may include customer -sustaining costs.

Some companies place more emphasis on the market-share variance than the market-size variance when evaluating their managers.

The market-size variance is the difference between two amounts: (1)the budgeted amount at budgeted mix based on the actual market size in units and the actual market share,and (2)the budgeted amount at budgeted mix based on actual market size in units and the budgeted market share.

The sales-quantity variance can be unfavourable if both the market-share and market-size variances are favourable.

The difference between (the budgeted contribution margin for the budgeted sales mix and budgeted volume)and (the budgeted contribution margin for the budgeted sales mix and the actual volume)is the

Under the incremental revenue allocation method,there is an incentive to be the first-ranked user.

The stand-alone revenue allocation method is a weighted-average method.

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

The sales-mix variance is the difference between two amounts: (1)the budgeted amount based on actual quantities sold of all products and the budgeted mix,and (2)the amount in the static budget.

Revenue tracing results in a more accurate assignment of revenues to products,than does revenue allocation.

The data for a paint manufacturing company for February are as follows: Price discount policy: $0.25 discount per gallon in excess of 20,000 gallons (up to 40,000) $0.35 discount per gallon in excess of 40,000 gallons Required: Prepare a report showing the customer-specific contribution.Present one column for customer-specific contribution and a second column showing customer-specific contribution as a percentage of customer revenue net of discounts (round percentages to two decimal places).

What actions might be taken with an unprofitable customer?

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-volume variance?

________ occurs where revenues,related but not traceable to individual products (service,customer,and so on),are assigned to those individual products.

The incremental revenue-allocation method uses product specific information pertaining to products in the bundle to determine the weights used to allocate the bundled revenues to those individual products.

When allocating the revenues between a bundled product offering,there are only two methods which can be used: 1)the stand-alone revenue-method and 2)the incremental revenue-allocation method.

A sporting goods division sells two types of juvenile skates;Atom and Mite.The following data are from the division's August results.Actual sales were 1,600 items,and the budget was 2,200 items. Variable costs per unit (pair)were budgeted at $56 for the Atom skates,and $119,350 in total. Required: Compute the sale-mix variance by type of skate,and in total.