Deck 12: Strategic Investment Decisions

Question 1

The contribution margin analysis indicates the effects of changes in contribution margins, given the level of budgeted sales.

Answer 1

False

Question 2

Paris Perfumery sells two perfumes, L'Amour and Plaisir. The expected sales mix is one bottle of L'Amour to five bottles of Plaisir. Planned sales and variable costs for last period were as follows: The revenue sales quantity variance for L'Amour was:

A) $150,000 U
B) $150,000 F
C) $262,500 U
D) $112,000 U

Answer 2

A

Question 3

The sales price variance is calculated as (actual price - standard price) x actual volume sold.

Answer 3

True

Question 4

The market size variance is also known as the industry volume variance.

Question 5

For organizations that sell multiple products, contribution margin and sales mix variances are often useful for decision making.

Question 6

The mix variance is favourable when actual percentage used for an input resource is more than the standard percentage for that input.

Question 7

The contribution sales mix variance examines the effects of changes in the sales mix given the standard contribution margin and standard quantity of units sold.

Question 8

When an organization sells more than one product or service, the contribution margin sales volume variance can be broken into two more variances, the contribution margin sales mix variance and the contribution margin sales quantity variance.

Question 9

Technical efficiency occurs when a business produces the maximum quantity of outputs for the minimum of inputs.

Question 10

Productivity is the ratio of the inputs used to the outputs achieved.

Question 11

Paris Perfumery sells two perfumes, L'Amour and Plaisir. The expected sales mix is one bottle of L'Amour to five bottles of Plaisir. Planned sales and variable costs for last period were as follows: During the period there was an economic downturn. Sales of L'Amour dropped off, so Paris reduced its price. Actual sales were as follows:
The contribution margin sales mix variance was:

A) $11,330 F
B) $9,150 U
C) $9,150 F
D) $10,250 U

Question 12

All of the following are profit related variances except:

A) Sales price variance
B) Fixed overhead production volume variance
C) Contribution margin variance
D) Revenue sales quantity variance

Question 13

The revenue sales quantity variance is calculated as (actual volume sold - standard volume sold) x actual price.

Question 14

The contribution margin sales volume variance calculates:

A) The effects of changes in contribution margins, given the actual level of sales
B) The effects of changes in units sold, given the standard contribution margins
C) The effects of changes in actual fixed costs, given the actual level of sales
D) The effects of changes in standard variable costs, given the actual level of sales

Question 15

The contribution margin sales quantity variance is divided into market share variance and market size variance.

Question 16

The market share variance reflects the difference between the budgeted market share percentage and the actual market share percentage achieved for the standard contribution margin.

Question 17

Paris Perfumery sells two perfumes, L'Amour and Plaisir. The expected sales mix is one bottle of L'Amour to five bottles of Plaisir. Planned sales and variable costs for last period were as follows: During the period there was an economic downturn. Sales of L'Amour dropped off, so Paris reduced its price. Actual sales were as follows:
The sales price variance for L'Amour was:

A) $172,500 F
B) $172,500 U
C) $0
D) $112,500 U

Question 18

The yield variance is unfavourable when less input is used than specified by the standard for the actual quantity of final product produced.

Question 19

An analysis of the total contribution margin is often useful, especially when a company's products are substitutes for one another.

Question 20

Contribution margin sales volume variance can be further subdivided into:

A) Contribution margin budget variance and contribution margin variance
B) Contribution margin variance and contribution margin sales mix variance
C) Contribution margin sales quantity variance and contribution margin sales mix variance
D) Contribution margin sales quantity variance and contribution margin budget variance

Question 21

The Sage and Thyme Company determine the partial productivity factor of their drying machine in drying basil leaves. The drying machine produces 1,500 bags of dried basil leaves using 79.5 kilograms of basil. The productivity factor for basil is:

A) 18.87
B) 0.053
C) 18.75
D) 3.75

Question 22

Direct materials efficiency variance is further analyzed to understand the fluctuations in the interchangeable input resources into:

A) Price and efficiency variances
B) Mix and yield variances
C) Mix and price variances
D) Efficiency and yield variances

Question 23

The contribution sales mix variance is favourable when:

A) Sales mix shifts toward products with a higher actual contribution margin
B) Sales mix shifts toward products with a higher standard contribution margin
C) Sales mix shifts from products with a higher standard contribution margin
D) Sales mix shifts toward products with a lower standard contribution margin

Question 24

The mix variance is favourable when the actual percentage used for an input resource is:

A) Less than the standard percentage for that input
B) More than the standard percentage for that input
C) Less than the actual amount for that input
D) More than the standard amount for that input

Question 25

Allocative efficiency considers the costs of the input mix and the:

A) Price paid by the company for the output.
B) Price paid by the consumer for the input.
C) Price paid by the consumer for the input.
D) Price paid by the consumer for the output.

Question 26

In analyzing sales variances, a question not related to the external market to assist in explaining the variances is:

A) How have changes in the market affected our sales?
B) How many costs were allocated to each unit?
C) Have changes in the market caused our sales mix to change?
D) Have sales been impacted by market growth or contraction?

Question 27

The contribution margin sales volume variance is favourable when:

A) The total actual sales volume is lesser than the standard volume
B) The total actual sales volume is equal to the standard volume
C) The total actual sales volume is greater than the standard volume
D) The total actual contribution margin is greater than the standard contribution margin

Question 28

Given an actual market for ice cream of 64,000 litres, forecasted market for ice cream of 60,000 litres, actual sales of 3,200 litres, projected market share of 4.75%, and a standard contribution margin of $1.30. What is the market share variance?

A) $104F
B) $208F
C) none
D) $208U

Question 29

The market size variance is also known as the:

A) Market depth variance
B) Market breadth variance
C) Industry volume variance
D) Industry size variance

Question 30

Technical efficiency occurs when a business produces the maximum quantity of outputs for the:

A) Minimum number of machine hours
B) Minimum quantity of inputs
C) Maximum number of machine hours
D) Maximum quantity of inputs

Question 31

Revenue variances are caused by all but the following:

A) Change in demand
B) Change in sales price
C) Discounting practices
D) Change in warranty program

Question 32

Given an actual market for ice cream of 64,000 litres, forecasted market for ice cream of 60,000 litres, actual sales of 3,200 litres, projected market share of 4.75%, and a standard contribution margin of $1.30. What is the contribution margin variance?

A) $455U
B) none
C) $225F
D) $455F

Question 33

The yield variance focuses on the difference between the standard amount of inputs required to make the actual output and:

A) Actual amount of inputs used to make the standard output.
B) Standard amount of inputs used to make the standard output.
C) Actual amount of inputs used to make the actual output.
D) Standard amount of inputs used to make the actual output.

Question 34

Two approaches to a total productivity measure are possible and are:

A) Production and total factor
B) Portfolio and production
C) Partial productivity and total factor
D) Portfolio and total factor

Question 35

The market share variance reflects the difference between the budgeted market share percentage and the:

A) Actual market share percentage achieved for the actual contribution margin.
B) Standard market share percentage achieved for the standard contribution margin.
C) Standard market share percentage achieved for the actual contribution margin.
D) Actual market share percentage achieved for the standard contribution margin.

Question 36

The mix variance explains the trade-offs between the quantity used of the different inputs by comparing the actual mix of the inputs used to the:

A) Standard mix for the inputs
B) Actual mix for the inputs
C) Standard mix for the outputs
D) Actual mix for the outputs

Question 37

The market share variance is favourable when the actual market share percentage is greater than the:

A) Budgeted share percentage
B) Budgeted mix of sales
C) Actual volume of sales
D) Budgeted volume of sales