Question 1

The contribution margin volume variance is the difference between the actual and budgeted quantities sold multiplied by the:

Accepted Answer

A)  budgeted sales price 
B)  actual contribution margin variance 
C)  budgeted contribution margin variance 
D)  budgeted average unit contribution margin

Question 2

The following information about Morgantown Avionics' two Altimeter models is provided:
  Budgeted unit sales for the entire Motorcycle Choppers industry were 4,000 of all model types and actual unit sales for the industry were 4,600.
Calculate: 
a. Market share variance (take percentages out to 4 significant digits)
b. Market size variance

Accepted Answer

The answer of The following information about Morgantown Avionics' two...

Question 3

Using variable costing procedures, net income will be less than when production is less than sales volume.

Accepted Answer

The answer of Using variable costing procedures, net income will...

Question 4

The following information pertains to Fondueland Corporation:  What is the value of ending inventory using the variable costing method?

Accepted Answer

A)  $310,000 
B)  $250,000 
C)  $390,000 
D)  $200,000

Question 5

One limitation to profitability analysis is its focus on performance.

Accepted Answer

The answer of One limitation to profitability analysis is its...

Question 6

The variable costing income statement for Vamonos Company for 2016 is as follows:
  Selected data for 2016 concerning the operations of the company are as follows:
Beginning inventory -0- units
Units produced 8,000 units
Manufacturing costs:
Direct labor $3.00 per unit
Direct materials 1.60 per unit
Variable overhead 1.40 per unit
Required:
Prepare an absorption costing income statement for 2016.

Accepted Answer

The answer of The variable costing income statement for Vamonos...

Question 7

When a company charges different prices for the same product to different customers it is referred to as price
__________ .

Accepted Answer

The answer of When a company charges different prices for...

Question 8

Hammerhold Company has two divisions with the following segment margins for the current year: Northern, $250,000; Southern, $450,000. Common expenses of the company are $55,000. What is Hammerhold Company's net income?

Accepted Answer

A)  $165,000 
B)  $700,000 
C)  $645,000 
D)  $750,000

Question 9

The perfectly competitive market has many buyers and sellers, none of which are large enough to influence the market.

Accepted Answer

A) True 
 B)False

Question 10

The sum of the change in units for each product multiplied by the difference between the budgeted contribution margin and the budgeted average unit contribution margin is called the:

Accepted Answer

A)  market share variance 
B)  sales mix variance 
C)  overall sales variance 
D)  market size variance

Question 11

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

Question 12

When companies with market power price products too high it's called price .

Accepted Answer

The answer of When companies with market power price products...

Question 13

Soloist Company had the following information:

Accepted Answer

A)  .1833 
B)  .3611 
C)  .6667 
D)  none of the above

Question 14

Target costing sets costs based on the price that customers are willing to pay.

Accepted Answer

A) True 
 B)False

Question 15

Lorillard Corporation has the following information for April, May, and June 2016:  Production costs per unit (based on 12,500 units) are as follows:
Direct materials $15
Direct labor 10
Variable factory overhead 7.50
Fixed factory overhead 5
Variable selling and admin. expenses 12.50
Fixed selling and admin. expenses 5
There were no beginning inventories for April 2016, 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 absorption costing method?

Accepted Answer

A)  $44,375.00 
B)  $35,625.00 
C)  $70,000.00 
D)  $210,937.50

Question 16

Which of the following correctly describes the slope of the demand and supply curves? Demand Curve Supply Curve

Accepted Answer

A)  upward sloping downward sloping 
B)  no slope upward sloping 
C)  downward sloping no slope 
D)  downward sloping upward sloping

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

Absorption costing is used to calculate two measures of profit: gross profit and operating income.

Accepted Answer

A) True 
 B)False

Question 19

Franklin Company's expected sales were 2,000 units at $100 per unit. During 2016, it had actual sales of 1,800 units at $110 per unit. Budgeted variable costs were $60 per unit. What is Franklin's sales volume variance?

Accepted Answer

A)  $8,000 (U) 
B)  $20,000 (U) 
C)  $18,000 (F) 
D)  $2,000 (U)

Question 20

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 2016 when 30,000 were projected. Sales for 2017 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. What is the profit (loss) from Option One?

Accepted Answer

A)  $1,050,000 
B)  $110,000 
C)  $950,000 
D)  $210,000

Exam 18: Pricing and Profitability Analysis

The contribution margin volume variance is the difference between the actual and budgeted quantities sold multiplied by the:

Using variable costing procedures, net income will be less than when production is less than sales volume.

The following information pertains to Fondueland Corporation: What is the value of ending inventory using the variable costing method?

One limitation to profitability analysis is its focus on performance.

When a company charges different prices for the same product to different customers it is referred to as price __________ .

Hammerhold Company has two divisions with the following segment margins for the current year: Northern, $250,000; Southern, $450,000. Common expenses of the company are $55,000. What is Hammerhold Company's net income?

The perfectly competitive market has many buyers and sellers, none of which are large enough to influence the market.

The sum of the change in units for each product multiplied by the difference between the budgeted contribution margin and the budgeted average unit contribution margin is called the:

When companies with market power price products too high it's called price .

Soloist Company had the following information:

Target costing sets costs based on the price that customers are willing to pay.

Which of the following correctly describes the slope of the demand and supply curves? Demand Curve Supply Curve

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

Absorption costing is used to calculate two measures of profit: gross profit and operating income.

Franklin Company's expected sales were 2,000 units at $100 per unit. During 2016, it had actual sales of 1,800 units at $110 per unit. Budgeted variable costs were $60 per unit. What is Franklin's sales volume variance?