Exam 14: Cost Allocation, customer-Profitability Analysis, and Sales-Variance Analysis

If one of five distribution channels is discontinued,corporate-sustaining costs such as general administration costs will most likely be reduced by 20%.

Corporate-sustaining costs should be allocated to ________.

In general,distribution-channel costs are more easily influenced by customer actions than customer batch-level costs.

When individual activities within a cost pool have a similar relationship with the cost driver,the cost pool ________.

What are the two components of the sales-volume variance?

The sales-volume variance is the difference between ________.

The budgeted contribution margin per composite unit for the budgeted sales mix can be computed by dividing the ________.

________ categorizes costs related to customers into different cost pools on the basis of either different classes of cost drivers or different degrees of difficulty in determining the cause-and-effect (or benefits-received)relationships.

For companies in which full allocation is not followed,corporate sustaining costs are ________.

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

The flexible-budget variance is the difference between an actual result and the flexible-budget amount based on the level of output actually achieved in the budget period.

The difference between budgeted contribution margin per composite unit for the actual mix and the budgeted contribution margin per composite unit for the budgeted mix is the ________.

To guide cost allocation decisions,the fairness or equity criterion ________.

Answer the following questions using the information below: Capity Tea Products has an exclusive contract with British Distributors. Calamine and Capity are two brands of teas that are imported and sold to retail outlets. The following information is provided for the month of March: Actual Budget Calamine Capity Calamine Capity Sales in pounds 3,740. 3,960. 4,400. 3,300 Price per pound \ 2.80 \ 2.80 \ 2.00 \ 3.00 Variable cost per pound 1.00 2.00 1.00 1.50 Contribution margin \ 1.80 \ 0.80 \ 1.00 \ 1.50 Budgeted and actual fixed corporate-sustaining costs are $1,850 and $2,300, respectively. -What is the contribution margin for the flexible budget?

Colise 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: Customer Revenues Customer Costs Marveline Burnett \ 360 \ 270 J Jackson 240 366 Roger Jones 96 90 Paul Saas 90 132 Becky Stephan 420 264 Required: a.Compute the operating income for each of the five customers. b.What options should Colise Services consider in light of the customer-profitability results? c.What problems might Colise Services encounter in accurately estimating the operating costs of each customer?

Homogeneous cost pool leads to ________.

Once a cost pool has been established,it should NOT need to be revisited or revised.

Answer the following questions using the information below: Capity Tea Products has an exclusive contract with British Distributors. Calamine and Capity are two brands of teas that are imported and sold to retail outlets. The following information is provided for the month of March: Actual Budget Calamine Capity Calamine Capity Sales in pounds 3,740. 3,960. 4,400. 3,300 Price per pound \ 2.80 \ 2.80 \ 2.00 \ 3.00 Variable cost per pound 1.00 2.00 1.00 1.50 Contribution margin \ 1.80 \ 0.80 \ 1.00 \ 1.50 Budgeted and actual fixed corporate-sustaining costs are $1,850 and $2,300, respectively. -For the contribution margin,what is the total flexible-budget variance?

Answer the following questions using the information below: Capity Tea Products has an exclusive contract with British Distributors. Calamine and Capity are two brands of teas that are imported and sold to retail outlets. The following information is provided for the month of March: Actual Budget Calamine Capity Calamine Capity Sales in pounds 3,740. 3,960. 4,400. 3,300 Price per pound \ 2.80 \ 2.80 \ 2.00 \ 3.00 Variable cost per pound 1.00 2.00 1.00 1.50 Contribution margin \ 1.80 \ 0.80 \ 1.00 \ 1.50 Budgeted and actual fixed corporate-sustaining costs are $1,850 and $2,300, respectively. -For the contribution margin,what is the total static-budget variance?

Costs in a homogeneous cost pools have the same or a similar cause-and-effect or benefits-received relationship with the cost-allocation base.