Question 1

Flexible budget contribution margin is equal to ________.

Accepted Answer

A flexible budget adjusts costs and revenues to match the actual level of activity. Therefore, the flexible budget contribution margin is calculated by taking the budgeted contribution margin per unit and multiplying it by the actual units sold. This approach allows for a more accurate comparison between budgeted and actual performance by adjusting for the actual level of sales activity.

Question 2

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 represents the sales-mix variance. This variance occurs when the sales mix (proportion of different products sold) differs from the budgeted sales mix.

Question 3

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 statement is true. A cost item can be directly related to one cost object and indirectly related to another cost object, depending on how it is being used or consumed within each object. For example, the cost of a specific tool might be a direct cost of one production line but an indirect cost of overall factory maintenance.

Question 4

Sales-mix variance = $300,000 (F), sales-volume variance = $470,000 (U), flexible-budget variance = $230,000 (F), market-size variance = $34,000 (U), calculate the sales-quantity variance.

Accepted Answer

Sales-quantity variance = $470,000 (U) - $300,000 (F) = $170,000 (U)

Question 5

The static-budget variance is the difference between ________.

Accepted Answer

Static-budget variance is the difference between actual results and the corresponding budgeted amount in the static budget. It measures the effectiveness of planning and controlling by comparing the actual results against the budgeted amount in the static budget without adjusting for changes in volume or other factors.

Question 6

Should a company allocate its corporate costs to divisions?

Accepted Answer

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

Question 7

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 8

The sales-mix variance will be unfavorable when which of the following occurs?

Accepted Answer

The sales-mix variance measures the effect of differences between the actual sales mix and the budgeted sales mix on profitability. If the actual sales mix shifts toward the less profitable units, the overall profitability will decrease, resulting in an unfavorable sales-mix variance. Option B is incorrect because a higher contribution margin for actual sales mix would result in a favorable sales-mix variance. Option C is incorrect because the sales quantity variance measures the effect of differences between actual and budgeted sales quantities. Option D is incorrect because the contribution-margin variance measures the effect of differences between the actual and budgeted contribution margin.

Question 9

Flexible-budget variance = $260,000 (F); sales-volume variance = $350,000 (U); sales-mix variance = $320,000 (F); calculate the static-budget variance.

Accepted Answer

Static-budget variance = $260,000 (F) + $350,000 (U) = $90,000 (U)

Question 10

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, such as automation and data analytics, have made it easier to track and allocate costs in a more precise manner, thus increasing the chances of multiple cost-pool systems passing the cost-benefit test.

Question 11

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 estimate of the expected profit per unit based on the planned sales mix.

Question 12

The sales-volume variance is subdivided into ________.

Accepted Answer

The sales-volume variance is divided into two parts: sales-quantity variance and sales-mix variance. Sales-quantity variance measures the effect of actual quantity sold on the total revenue, assuming the actual product mix is the same as the planned product mix. Sales-mix variance measures the effect of the difference between the actual product mix and planned product mix on the total revenue. Therefore, option B is the correct answer.

Question 13

The sales-mix variance is calculated by ________.

Accepted Answer

The sales-mix variance is the difference between the budgeted contribution margin based on the actual units sold at the actual mix and the budgeted contribution margin based on the actual units sold at the budgeted mix. Therefore, the correct formula is to deduct the budgeted contribution margin based on actual units at budgeted mix from the budgeted contribution margin based on actual units sold at the actual mix, which is option A.

Question 14

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

Accepted Answer

Subdividing the sales-volume variance into the sales-mix variance (caused by changes in the proportion of different products sold) and the sales-quantity variance (caused by changes in the volume sold) provides more specific information on the factors affecting the variance. The other options do not accurately subdivide the sales-volume variance.

Question 15

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).

Question 16

Sales-mix variance = $300,000 (F), sales-quantity variance = $250,000 (F), flexible-budget variance = $120,000 (F), market-size variance = $80,000 (U), calculate the sales-volume variance.

Accepted Answer

Sales-volume variance = $300,000 (F) + $250,000 (F) = $550,000 (F)

Question 17

Market-share variance = $380,000 (U); Market-size variance = $250,000 (F); Sales-mix variance = $640,000 (F); calculate the sales-quantity variance.

Accepted Answer

Sales-quantity variance = $380,000 (U) + $250,000 (F) = $130,000 (U)

Question 18

The sales-quantity variance can be decomposed into ________.

Accepted Answer

The sales-quantity variance can be decomposed into market-share variance and market-size variance, which analyze the effects of changes in market share and market size on sales quantity.

Question 19

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 20

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

Accepted Answer

Once a cost pool has been established, it is often necessary to revisit it or revise it.

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