Question 1

Which of the following is one of the items that are important to managers when analyzing sales-volume variance information?

Accepted Answer

The answer of Which of the following is one of...

Question 2

Use the information below to answer the following question(s).
Special Tea Products (STP)has an exclusive contract with Tea Distributors.Two brands of Teas are imported,Strong and Mild,and sold to retail outlets.The monthly budget for the contract is based on a combination of last year's performance,a forecast of general industry sales,and the company's expected share of the Canadian market for imported Tea.The following information is provided for the month of May:
  Budgeted fixed costs are $1,750.Actual fixed costs are $2,000.
-What is the STP total sales-quantity variance for revenues?

Accepted Answer

The answer of Use the information below to answer the...

Question 3

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

Accepted Answer

This statement is true. Some companies prioritize achieving a larger market share over expanding the overall size of the market when assessing the effectiveness of their managers. This emphasis acknowledges that the company can increase its revenue and profits by gaining a greater share of the market, even if the market size does not grow significantly.

Question 4

Use the information below to answer the following question(s).
Special Tea Products (STP)has an exclusive contract with Tea Distributors.Two brands of Teas are imported,Strong and Mild,and sold to retail outlets.The monthly budget for the contract is based on a combination of last year's performance,a forecast of general industry sales,and the company's expected share of the Canadian market for imported Tea.The following information is provided for the month of May:
  Budgeted fixed costs are $1,750.Actual fixed costs are $2,000.
-What is the STP total flexible-budget variance for revenues?

Accepted Answer

The question only provides information on fixed costs and no information on actual revenues or flexible budgeted revenues, so it is impossible to calculate the flexible-budget variance for revenues. Therefore, the answer is (B) "Cannot be determined."

Question 5

The sales-volume variance for revenue is the

Accepted Answer

The answer of The sales-volume variance for revenue is the
...

Question 6

Use the information below to answer the following question(s).
Special Tea Products (STP)has an exclusive contract with Tea Distributors.Two brands of Teas are imported,Strong and Mild,and sold to retail outlets.The monthly budget for the contract is based on a combination of last year's performance,a forecast of general industry sales,and the company's expected share of the Canadian market for imported Tea.The following information is provided for the month of May:
  Budgeted fixed costs are $1,750.Actual fixed costs are $2,000.
-What is the STP total sales-mix variance for contribution margin?

Accepted Answer

The sales-mix variance for contribution margin can be calculated as follows:
(Budgeted unit contribution margin of Strong tea × Actual Sales of Strong tea) + (Budgeted unit contribution margin of Mild tea × Actual Sales of Mild tea) - (Budgeted unit contribution margin of Strong tea × Budgeted Sales of Strong tea) - (Budgeted unit contribution margin of Mild tea × Budgeted Sales of Mild tea)
= ($1.60 × 900) + ($1.20 × 1,100) - ($1.60 × 1,000) - ($1.20 × 1,000)
= $1,440 + $1,320 - $1,600 - $1,200
= $960 (favourable)
Therefore, the STP total sales-mix variance for contribution margin is $960 favourable. However, the question asks for the total sales-mix variance in dollars, not in favourable or unfavourable terms. Since the budgeted fixed costs are irrelevant to the sales-mix variance, the total variance in dollars is simply the favourable variance of $960. The closest option is C, $150 favourable.

Question 7

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

Accepted Answer

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 represents the change in contribution margin due to a difference in volume. This difference is referred to as the sales-quantity variance, which measures the effect on contribution margin of selling more or fewer units than anticipated at the beginning of the period. The sales-mix variance measures the effect on contribution margin of a difference between the actual and budgeted sales mix, while the sales-volume variance measures the effect on contribution margin of selling a different volume than anticipated. The market-size and market-share variances are broader measures that look at the overall market rather than just the company's internal operations.

Question 8

A company sells two products: radios and speakers.The expected sales for radios were 1,500 units;2,000 were sold.The budgeted selling price for radios was $15.00;however,the actual selling price was $13.00.The expected sales for speakers were 4,600 units;5,000 were sold.The budgeted selling price for speakers was $7.50;however,the actual selling price was $9.00.Budgeted and actual variable costs were $4.00 per unit for the radios and $2.00 per unit for the speakers.What is the contribution margin sales-volume variance for the period?

Accepted Answer

The contribution margin is calculated as follows:
For radios:
Expected contribution margin per unit = Selling price - Variable cost = $15.00 - $4.00 = $11.00
Actual contribution margin per unit = Selling price - Variable cost = $13.00 - $4.00 = $9.00
Sales volume variance for radios = (Actual sales - Expected sales) x Expected contribution margin per unit
= (2,000 - 1,500) x $11.00 = $5,500 favourable

For speakers:
Expected contribution margin per unit = Selling price - Variable cost = $7.50 - $2.00 = $5.50
Actual contribution margin per unit = Selling price - Variable cost = $9.00 - $2.00 = $7.00
Sales volume variance for speakers = (Actual sales - Expected sales) x Expected contribution margin per unit
= (5,000 - 4,600) x $5.50 = $2,200 favourable

Therefore, the contribution margin sales-volume variance for the period is the sum of the sales volume variances for radios and speakers, which is $5,500 (favourable) + $2,200 (favourable) = $7,700 (favourable). The correct answer is D.

Question 9

The sales-volume variance plus or minus the static budget amount results in

Accepted Answer

The sales-volume variance is the difference between the actual sales volume and the budgeted sales volume at the standard contribution margin per unit. When this variance is added or subtracted to/from the static (fixed) budget amount, it results in the flexible budget amount.

Question 10

Unfavourable variances reveal not only what occurred but how it occurred.

Accepted Answer

The answer of Unfavourable variances reveal not only what occurred...

Question 11

If the market-size variance is $650 F,the sales-mix variance is $500 F,the flexible budget variance is $9,250 F,and the static budget variance is $8,000 U,which of the following is TRUE?

Accepted Answer

The answer of If the market-size variance is $650 F,the...

Question 12

A difficulty with the market-share and market-size variances is that accurate measures of market share and market size often do not exist.

Accepted Answer

Market share and market size are often estimates rather than precise measurements, making it difficult to accurately calculate their variances.

Question 13

Use the information below to answer the following question(s).
Special Tea Products (STP)has an exclusive contract with Tea Distributors.Two brands of Teas are imported,Strong and Mild,and sold to retail outlets.The monthly budget for the contract is based on a combination of last year's performance,a forecast of general industry sales,and the company's expected share of the Canadian market for imported Tea.The following information is provided for the month of May:
  Budgeted fixed costs are $1,750.Actual fixed costs are $2,000.
-What is the static budget variance (contribution margin)for Mild Tea?

Accepted Answer

The answer of Use the information below to answer the...

Question 14

Which of the following actually calculates the sales-quantity variance?

Accepted Answer

The answer of Which of the following actually calculates the...

Question 15

Which of the following is not a sales related variance?

Accepted Answer

The answer of Which of the following is not a...

Question 16

The sales-quantity variance arises because

Accepted Answer

The sales-quantity variance is the difference between the actual quantity sold and the budgeted quantity for a product or group of products. It arises because the total quantity of units actually sold differs from the static budget.

Question 17

Fresh Bread Company sells a special mix of wheat bread.If the expected output equals the actual output,the sales-volume variance

Accepted Answer

If expected output equals actual output, there will be no difference between expected sales volume and actual sales volume. Hence, the sales-volume variance will be zero.

Question 18

Use the information below to answer the following question(s).
Special Tea Products (STP)has an exclusive contract with Tea Distributors.Two brands of Teas are imported,Strong and Mild,and sold to retail outlets.The monthly budget for the contract is based on a combination of last year's performance,a forecast of general industry sales,and the company's expected share of the Canadian market for imported Tea.The following information is provided for the month of May:
  Budgeted fixed costs are $1,750.Actual fixed costs are $2,000.
-What is the STP total static-budget variance for revenues?

Accepted Answer

The answer of Use the information below to answer the...

Question 19

Use the information below to answer the following question(s).
Special Tea Products (STP)has an exclusive contract with Tea Distributors.Two brands of Teas are imported,Strong and Mild,and sold to retail outlets.The monthly budget for the contract is based on a combination of last year's performance,a forecast of general industry sales,and the company's expected share of the Canadian market for imported Tea.The following information is provided for the month of May:
  Budgeted fixed costs are $1,750.Actual fixed costs are $2,000.
-What is the STP total sales-volume variance (contribution margin)for May?

Accepted Answer

The answer of Use the information below to answer the...

Question 20

Use the information below to answer the following question(s).
Special Tea Products (STP)has an exclusive contract with Tea Distributors.Two brands of Teas are imported,Strong and Mild,and sold to retail outlets.The monthly budget for the contract is based on a combination of last year's performance,a forecast of general industry sales,and the company's expected share of the Canadian market for imported Tea.The following information is provided for the month of May:
  Budgeted fixed costs are $1,750.Actual fixed costs are $2,000.
-What is the STP sales-volume variance (contribution margin)for Strong tea?

Accepted Answer

The answer of Use the information below to answer the...

Quiz 16: Revenue and Customer Profitability Analysis

Which of the following is one of the items that are important to managers when analyzing sales-volume variance information?

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

The sales-volume variance for revenue is the

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

The sales-volume variance plus or minus the static budget amount results in

Unfavourable variances reveal not only what occurred but how it occurred.

If the market-size variance is $650 F,the sales-mix variance is $500 F,the flexible budget variance is $9,250 F,and the static budget variance is $8,000 U,which of the following is TRUE?

A difficulty with the market-share and market-size variances is that accurate measures of market share and market size often do not exist.

Which of the following actually calculates the sales-quantity variance?

Which of the following is not a sales related variance?

The sales-quantity variance arises because

Fresh Bread Company sells a special mix of wheat bread.If the expected output equals the actual output,the sales-volume variance