Question 1

Discuss the limitation of profit measurement.

Accepted Answer

Profit is an important measure. It is li

Question 2

An alternative to the limitation of focusing on profits would be

Accepted Answer

A)  communicating other measures are important but continue to base rewards on profits. 
B)  overstate the value of ending inventory in order to reduce cost of goods sold and improve operating income performance. 
C)  focus on long-term objectives and appropriate emphasis on profit. 
D)  analyze the product mix. 
A)  communicating other measures are important but continue to base rewards on profits. 
B)  overstate the value of ending inventory in order to reduce cost of goods sold and improve operating income performance. 
C)  focus on long-term objectives and appropriate emphasis on profit. 
D)  analyze the product mix.

Question 3

Product-level costs are highest in the maturity phase and fall through the decline phase.

Accepted Answer

A) True 
 B)False

Question 4

The sales volume variance is the difference between actual and expected volume sold multiplied by the expected price.

Accepted Answer

A) True 
 B)False

Question 5

The budgeted average unit contribution margin is the budgeted total contribution margin divided by the:

Accepted Answer

A)  budgeted total units 
B)  budgeted total price 
C)  budgeted fixed expenses 
D)  budgeted variable expenses 
A)  budgeted total units 
B)  budgeted total price 
C)  budgeted fixed expenses 
D)  budgeted variable expenses

Question 6

The sales volume variance communicates the impact the difference between actual and expected units sold has on revenues.

Accepted Answer

A) True 
 B)False

Question 7

Figure 18-1 The Lancashire Corporation manufactures bottled water with an average manufacturing cost of $2 per case (a case contains 24 bottles). Bayview sold 1,000,000 cases last year to the following types of customers:
  The drugstore chains have special handling costs of $0.20 a case and increased administrative assistance costing $45,000 per year.
The gas station chains require special marketing promotions that cost $50,000. Sales commissions of 10% are paid.
The supermarket chains order electronically through EDI which costs $25,000 annually. Bayview is responsible for shipping costs, which totaled $0.50 a case and special labels costing $0.02 per bottle
Local pharmacies have special handling costs of $0.10 per case and sales commissions are paid to agents costing $0.25 per case. Bad debt expense averages 10% of sales.
Refer to Figure 18-1. What is the total cost per case for drugstore chains?

Accepted Answer

A)  $2.12 per case 
B)  $2.32 per case 
C)  $2.20 per case 
D)  $2.45 per case 
A)  $2.12 per case 
B)  $2.32 per case 
C)  $2.20 per case 
D)  $2.45 per case

Question 8

Allison Manufacturing Company produces three products: A, B, and
C. The income statement for 2014 is as follows:
   The sales, contribution margin ratios, and direct fixed expenses for the three types of products are as follows:
   Required:
Prepare income statements segmented by products. Include a column for the entire firm in the statement.

Accepted Answer

The answer of Allison Manufacturing Company produces three products: A,...

Question 9

Corlis Construction Company builds houses. Each job requires a bid. Corlis' bidding policy is to estimate the costs of materials, direct labor, and subcontractor's costs. These are totaled and a markup is applied to cover overhead and profit. In the coming year, Corlis believes it will be the successful bidder on ten jobs with the following total revenues and costs:
   The residual will cover overhead and profits.
Required:

Accepted Answer

The answer of Corlis Construction Company builds houses. Each job...

Question 10

Girasol Products is thinking of expanding their product line. Their current income statement is as follows:   The cost of the new product is $95 per unit made up of $50 of direct materials, $35 of direct labor and $10 of overhead per unit. What is the bid price assuming Girasol utilizes a mark-up on direct materials?

Accepted Answer

A)  $119 
B)  $133 
C)  $70 
D)  $19.77 
A)  $119 
B)  $133 
C)  $70 
D)  $19.77

Question 11

Price discrimination is the charging of different prices to different customers to promote fairer competition.

Accepted Answer

A) True 
 B)False

Question 12

The following information pertains to Cumberland Corporation:   Absorption costing net income would be how much greater or less than the variable costing net income?

Accepted Answer

A)  $80,000 less than 
B)  $80,000 greater than 
C)  $60,000 greater than 
D)  $60,000 less than 
A)  $80,000 less than 
B)  $80,000 greater than 
C)  $60,000 greater than 
D)  $60,000 less than

Question 13

The variance that compares actual volume with expected volume multiplied by expected price
is the __________ variance.

Accepted Answer

The answer of The variance that compares actual volume with...

Question 14

What are the ways employee behavior changes in relation to a profit emphasis?

Accepted Answer

A)  desire to avoid losses may result in short-run decisions 
B)  unethical behavior may take place if rewards or bonuses are based on profits 
C)  ignoring the less measurable outcomes that may benefit the company 
D)  all of the above are potential changes 
A)  desire to avoid losses may result in short-run decisions 
B)  unethical behavior may take place if rewards or bonuses are based on profits 
C)  ignoring the less measurable outcomes that may benefit the company 
D)  all of the above are potential changes

Question 15

Lorillard Corporation has the following information for April, May, and June 2014:   There were no beginning inventories for April 2014, and all units were sold for $50. Costs are stable over the three months.
What is the May ending inventory cost for Lorillard Corporation using the variable costing method?

Accepted Answer

A)  $182,812.50 
B)  $187,500 
C)  $312,500 
D)  $162,500 
A)  $182,812.50 
B)  $187,500 
C)  $312,500 
D)  $162,500

Question 16

All of the following costs are included in inventory under absorption costing EXCEPT

Accepted Answer

A)  direct materials. 
B)  direct labor. 
C)  fixed selling expenses. 
D)  fixed factory overhead. 
A)  direct materials. 
B)  direct labor. 
C)  fixed selling expenses. 
D)  fixed factory overhead.

Question 17

Scottish Company manufactures a variety of toys and games. John Chisholm, president, is disappointed in the sales of a new board game. The game sold only 10,000 units in 2014 when 30,000 were projected. Sales for 2015 look no better. At $100 per game, it is not a hot seller. Direct costs of the board game are $56 variable cost and $100,000 fixed. John is considering several options. Option One: Cut the price to $70 and perhaps sell 15,000 units. Option Two: Cut the price to $60, reduce material costs by $10, and cut advertising by $60,000. Anticipated volume for this option is 10,000 units. Option Three: Cut the price to $80 and include a $10 mail-in rebate offer. It is anticipated that 15,000 units could be sold and only 30 percent of the rebate coupons would be redeemed. Which option is preferred?

Accepted Answer

A)  Options One and Three are equally preferred. 
B)  Option Three 
C)  Option Two 
D)  Option One 
A)  Options One and Three are equally preferred. 
B)  Option Three 
C)  Option Two 
D)  Option One

Question 18

The biggest limitation to profitability analysis is its focus on past, not future performance.

Accepted Answer

A) True 
 B)False

Question 19

Another term for predatory pricing in the international market is __________ .

Accepted Answer

The answer of Another term for predatory pricing in the...

Question 20

The market size variance is favorable when the budgeted industry sales in units is:

Accepted Answer

A)  more than the actual units sold 
B)  less than the actual units sold 
C)  more than the actual market share percentage 
D)  less than the budgeted market share percentage 
A)  more than the actual units sold 
B)  less than the actual units sold 
C)  more than the actual market share percentage 
D)  less than the budgeted market share percentage

Discuss the limitation of profit measurement.

An alternative to the limitation of focusing on profits would be

Product-level costs are highest in the maturity phase and fall through the decline phase.

The sales volume variance is the difference between actual and expected volume sold multiplied by the expected price.

The budgeted average unit contribution margin is the budgeted total contribution margin divided by the:

The sales volume variance communicates the impact the difference between actual and expected units sold has on revenues.

Price discrimination is the charging of different prices to different customers to promote fairer competition.

The following information pertains to Cumberland Corporation: Absorption costing net income would be how much greater or less than the variable costing net income?

The variance that compares actual volume with expected volume multiplied by expected price is the __________ variance.

What are the ways employee behavior changes in relation to a profit emphasis?

All of the following costs are included in inventory under absorption costing EXCEPT

The biggest limitation to profitability analysis is its focus on past, not future performance.

Another term for predatory pricing in the international market is __________ .

The market size variance is favorable when the budgeted industry sales in units is:

Introduction to Cost Management

Basic Cost Management Concepts

Cost Behavior

Activity-Based Costing

Product and Service Costing: Job-Order System

Process Costing

Allocating Costs of Support Departments and Joint Products

Budgeting for Planning and Control Key

Standard Costing: a Functional-Based Control Approach

Decentralization: Responsibility Accounting, Performance Evaluation, and Transfer Pricing

Strategic Cost Management

Activity-Based Management

The Balanced Scorecard: Strategic-Based Control

Quality and Environmental Cost Management

Lean Accounting and Productivity Measurement

Cost-Volume-Profit Analysis

Activity Resource Usage Model and Tactical Decision Making

Capital Investment

Inventory Management: Economic Order Quantity, Jit, and the Theory of Constraints

Filters

Exam 18: Pricing and Profitability Analysis

Discuss the limitation of profit measurement.

An alternative to the limitation of focusing on profits would be

Product-level costs are highest in the maturity phase and fall through the decline phase.

The sales volume variance is the difference between actual and expected volume sold multiplied by the expected price.

The budgeted average unit contribution margin is the budgeted total contribution margin divided by the:

The sales volume variance communicates the impact the difference between actual and expected units sold has on revenues.

Price discrimination is the charging of different prices to different customers to promote fairer competition.

The following information pertains to Cumberland Corporation: Absorption costing net income would be how much greater or less than the variable costing net income?

The variance that compares actual volume with expected volume multiplied by expected price is the __________ variance.

What are the ways employee behavior changes in relation to a profit emphasis?

All of the following costs are included in inventory under absorption costing EXCEPT

The biggest limitation to profitability analysis is its focus on past, not future performance.

Another term for predatory pricing in the international market is __________ .

The market size variance is favorable when the budgeted industry sales in units is:

Introduction to Cost Management

Basic Cost Management Concepts

Cost Behavior

Activity-Based Costing

Product and Service Costing: Job-Order System

Process Costing

Allocating Costs of Support Departments and Joint Products

Budgeting for Planning and Control Key

Standard Costing: a Functional-Based Control Approach

Decentralization: Responsibility Accounting, Performance Evaluation, and Transfer Pricing

Strategic Cost Management

Activity-Based Management

The Balanced Scorecard: Strategic-Based Control

Quality and Environmental Cost Management

Lean Accounting and Productivity Measurement

Cost-Volume-Profit Analysis

Activity Resource Usage Model and Tactical Decision Making

Capital Investment

Inventory Management: Economic Order Quantity, Jit, and the Theory of Constraints

Filters