Question 1

Advances in information-gathering technology make it more likely that multiple cost-pool systems will pass the cost-benefit test.

Accepted Answer

Advances in information-gathering technology can provide more accurate and detailed information about the costs and activities of a company, making it easier to implement multiple cost-pool systems that accurately allocate costs and provide insights for decision-making. This can lead to a better cost-benefit analysis and make it more likely that such systems will be beneficial for a company.

Question 2

More insight into the sales-volume variance can be gained by subdividing it into ________.

Accepted Answer

Subdividing the sales-volume variance into sales-mix variance and sales-quantity variance provides more insight into the factors that contributed to the variance. The sales-mix variance shows the effect of changes in the proportion of products sold, while the sales-quantity variance shows the effect of changes in the actual number of products sold.

Question 3

For each cost pool listed select an appropriate allocation base from the list below.An allocation base may be used only once.Assume a manufacturing company.
Allocation bases for which the information system can provide data:
1.Number of employees per department
2.Employee wages and salaries per department
3.Number of sales orders
4.Hours of operation of each production department
5.Machine hours by department
6.Operations costs of each department
7.Hours of computer use per month per department
8.Number of units sold
Cost pools:
 ___a. Vice President of Finance's office expenses
___b. Computer operations used in conjunction with manufacturing
___c. Personnel Department
___d. Sales-order costs
___e. Energy costs

Accepted Answer

The answer of For each cost pool listed select an...

Question 4

Sales-mix variance = $300,000 (F),sales-quantity variance = $200,000(F),flexible-budget variance = $100,000(F),market-size variance = $50,000(U),calculate the sales-volume variance.

Accepted Answer

Sales-volume variance is the sum of sales-mix variance and sales-quantity variance: $300,000 (F) + $200,000 (F) = $500,000 (F).

Question 5

Flexible budget contribution margin is equal to ________.

Accepted Answer

Flexible budget contribution margin is calculated based on the actual units sold of each product and the budgeted contribution margin per unit. Therefore, the correct calculation for flexible budget contribution margin is budgeted contribution margin per unit times actual units sold of each product.

Question 6

The static-budget variance is the difference between ________.

Accepted Answer

The static-budget variance is calculated by subtracting the budgeted amount in the static budget from the actual result. The resulting difference shows how much the actual result deviates from the original plan. Therefore, the correct choice is A - an actual result and the corresponding budgeted amount in the static budget.

Question 7

An individual cost item can be simultaneously a direct cost of one cost object and an indirect cost of another cost object.

Accepted Answer

This is possible in cases where a cost item is directly attributable to one cost object but is also shared among multiple cost objects, making it an indirect cost for the latter.

Question 8

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

Accepted Answer

The budgeted contribution margin per composite unit for the budgeted sales mix can be computed by dividing the total budgeted contribution margin by the total budgeted units. This calculation gives an idea of how much contribution margin each unit of the sales mix should generate.

Question 9

The sales-volume variance is subdivided into ________.

Accepted Answer

The sales-volume variance is subdivided into two components: (1) sales-mix variance, which measures the effect on profit of a change in the proportion of products or services sold, and (2) sales-quantity variance, which measures the effect on profit of a change in the number of products or services sold. Option A, C, and D are incorrect.

Question 10

The static-budget variance will be favorable,when ________.

Accepted Answer

The static-budget variance will be favorable when both the flexible-budget variance and the sales-volume variance are favorable. This indicates that the company performed better than expected in terms of both sales volume and cost/revenue management, leading to a favorable comparison against the static (fixed) budget.

Question 11

The sales-mix variance will be unfavorable when ________.

Accepted Answer

The sales-mix variance measures the effect of the deviation of the actual sales mix from the budgeted sales mix on the total profit. The variance is unfavorable when the actual sales mix shifts towards the less profitable units, reducing the overall contribution margin. Therefore, option A is the correct answer. Option B is incorrect because a higher contribution margin per composite unit for the actual sales mix is always favorable, not unfavorable. Option C is incorrect because the sales-volume variance measures the impact of the difference between actual and budgeted unit sales on profit. Option D is incorrect because a comparison of actual and budgeted contribution margins is used to calculate the total contribution margin variance, not the sales-mix variance.

Question 12

The sales-mix variance is calculated by ________.

Accepted Answer

The sales-mix variance is the difference between the budgeted contribution margin based on actual units at budgeted mix and the budgeted contribution margin based on actual units sold at the actual mix. Option A correctly represents the calculation of the sales-mix variance.

Question 13

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 ________.

Accepted Answer

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 called the sales-mix variance. This variance arises due to the difference in the actual mix of products sold and the budgeted mix of products sold. The sales-mix variance is used to analyze the impact of the change in the mix of products on the overall profitability of the company.

Question 14

Flexible-budget variance = $200,000 (F); sales-volume variance = $350,000 (U); sales-mix variance = $300,000 (F); calculate the static-budget variance.

Accepted Answer

The static-budget variance is calculated by combining the flexible-budget variance and the sales-volume variance. Here, $200,000 (F) - $350,000 (U) = $150,000 (U).

Question 15

Market-share variance = $350,000 (U); Market-size variance = $300,000 (F); Sales-mix variance = $600,000 (F); calculate the sales-quantity variance.

Accepted Answer

The answer of Market-share variance = $350,000 (U); Market-size variance...

Question 16

The sales-quantity variance can be decomposed into ________.

Accepted Answer

The answer of The sales-quantity variance can be decomposed into...

Question 17

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

Accepted Answer

Cost pools may need to be revisited and revised based on changes in the cost structure or business operations. It is important to regularly review cost pools to ensure accuracy and relevance in the allocation of costs.

Question 18

Should a company allocate its corporate costs to divisions?

Accepted Answer

The answer of Should a company allocate its corporate costs...

Question 19

Sales-mix variance = $250,000 (F),sales-volume variance = $4,50,000 (U),flexible-budget variance = $200,000(F),market-size variance = $30,000(U),calculate the sales-quantity variance.

Accepted Answer

The answer of Sales-mix variance = $250,000 (F),sales-volume variance =...

Question 20

More insight into the static-budget variance can be gained by subdividing it into ________.

Accepted Answer

The static-budget variance can be more insightfully analyzed by dividing it into the flexible-budget variance and the sales-volume variance. This subdivision helps in understanding the differences due to actual performance versus planned performance (flexible-budget variance) and the impact of the difference in the actual versus expected sales volume (sales-volume variance).

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