02 Jan Operating income

Question 1

6 / 6 pts

(TCO 6) Homogeneity is used to

develop cost pools in which the costs have the same or similar cost-allocation base.

develop cost pools of similar amounts for allocation purposes.

develop cost pools based on similarity of origination costs to be allocated.

develop costs pools only for activity-based costing.

Question 2

6 / 6 pts

(TCO 6) Which of the factors that managers must consider in deciding the allocation of resources across customers might provide misleading signals about dropping a current customer?

Potential for customer growth

Likelihood of customer retention

Long-run customer profitability

Ability to learn from customer

Question 3

0 / 6 pts

(TCO 5) Natural Nutrients Bakery of Southfield produces three flavors of cat morsels that have budgeted and actual sales data for a bag of a dozen of its cat morsels, as follows, for December 20XX.

Budgeted Data Actual Data

Tuna ChikBits ChezNips Tuna ChikBits ChezNips

Bags 7,200 4,800 4,000 10,800 3,600 7,200

CM per bag $2.50 $4.00 $5.00 $2.00 $3.00 $7.50

Cont. Margin $18,000 $19,200 $20,000 $21,600 $10,800 $54,000

Total Contribution Margin $57,200 $54,000

According to company forecasts, it was budgeting to earn a 25% market share in total units (bags) of specialty prepared cat treats sold in December 20XX in Southfield. Reliable industry sources indicate that the total number of bags of cat treats sold for December 200X in Southfield was 72,000.

The amount of Natural Nutrients Bakery’s sales-volume variance for December 20XX is

$3,600 F.

$20,200 F.

$20,020 F.

29,300 F.

Question 4

6 / 6 pts

(TCO 6) Natural Nutrients Bakery of Southfield produces three flavors of cat morsels that have budgeted and actual sales data for a bag of a dozen of its cat morsels as follows for December 20XX.

Budgeted Data Actual Data

Tuna ChikBits ChezNips Tuna ChikBits ChezNips

Bags 7,200 4,800 4,000 10,800 3,600 7,200

CM per bag $2.50 $4.00 $5.00 $2.00 $3.00 $7.50

Cont. Margin $18,000 $19,200 $20,000 $21,600 $10,800 $54,000

Total Contribution Margin $57,200 $86,400

According to company forecasts, it was budgeting to earn a 25% market share in total units (bags) of specialty prepared cat treats sold in December 20XX in Southfield. Reliable industry sources indicate that the total number of bags of cat treats sold for December 200X in Southfield was 72,000.

Natural Nutrients Bakery experienced a market-size variance for December 20XX of

$7,150 F.

$8,000F.

$11,400 F.

$11,600 F.

Question 5

0 / 6 pts

(TCO 6) Fulbrite Fashions sells a line of women’s dresses. Fulbrite’s performance report for November is shown below. The company uses a flexible budget to analyze its performance and to measure the effect on operating income of the various factors affecting the difference between budgeted and actual operating income.

Actual Budget

Dresses sold 5,000 6,000

Sales $235,000 $300,000

Variable costs (145,000) (180,000)

Contribution margin $ 90,000 $ 120,000

Fixed costs (84,000) (80,000)

Operating income $ 6,000 $ 40,000

Fulbrite’s sales price variance for November is

$30,000 unfavorable.

$18,000 unfavorable.

$20,000 unfavorable.

$15,000 unfavorable.