An unfavorable market-share variance would MOST likely be caused by a. a competitor providing better service.
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121. An
unfavorable market-share variance would MOST likely be caused by
a. a competitor providing better service.
b. a competitor having distribution problems.
c. the company offering products at a lower
price.
d. the company experiencing quality-control
problems that get negative media coverage.
122. The
market-size variance results from a difference between the
a. actual market share and the budgeted
market share.
b. actual contribution margin and the
budgeted contribution margin.
c. budgeted contribution margin per composite
unit for the actual mix and the budgeted contribution margin per composite unit
for the budgeted mix.
d. actual market size in units and the
budgeted market size in units.
123. The
market-size variance will be unfavorable when
a. the flexible-budget contribution margin is
greater than the static-budget contribution margin.
b. the actual market share is greater than
the budgeted market share.
c. actual market size in units is less than
budgeted market size in units.
d. actual unit sales are less than budgeted
unit sales.
124. A
favorable market-size variance would MOST likely be caused by
a. the company reducing the services provided
to customers.
b. an increase in overall market size.
c. a new competitor moving into the area.
d. a competitor providing better prices.
125. Reliable
information about market size and market share is available
a. for no industries.
b. for the management consulting and personal
financial planning industries.
c. for the automobile and television
industries.
d. for all industries.
126. What is
the market-size variance?
a. $500 U
b. $1,500 U
c. $1,600 F
d. $1,000 F
127. What is
the market-share variance?
a. $1,000 F
b. $1,100 F
c. $500 U
d. $1,500 U
128. What is
the sales-quantity variance?
a. $1,500 U
b. $1,000 F
c. $500 U
d. The variance cannot be determined.
129. What is
the contribution margin for the flexible budget?
a. $1,200,000
b. $4,200,000
c. $5,200,000
d. $5,400,000
130. What is
the total static-budget variance in terms of the contribution margin?
a. $900 favorable
b. $700 favorable
c. $200 unfavorable
d. $360 unfavorable
131. What is
the total flexible-budget variance in terms of the contribution margin?
a. $900 favorable
b. $700 favorable
c. $200 unfavorable
d. $360 unfavorable
132. What
is the total sales-volume variance in terms of the contribution margin?
a. $900 favorable
b. $1,260 favorable
c. $200 unfavorable
d. $360 unfavorable
133. What
is the total sales-quantity variance in terms of the contribution margin?
a. $200 unfavorable
b. $900 favorable
c. $360 unfavorable
d. $1,260 favorable
134. What
is the total sales-mix variance in terms of the contribution margin?
a. $200 unfavorable
b. $360 unfavorable
c. $900 favorable
d. $1,260 favorable
135. What is
the budgeted contribution margin per composite unit of the budgeted mix?
a. $140.625
b. $180.000
c. $208.000
d. $162.500
Answer: b Difficulty: 2 Objective: 8
ZENITH = $300 x .2 = $
60
House-Helper
= $150 x .8 = 120
OR
$4,500,000/25,000 = $180
136. What is
the market-size variance?
a. $1,152,000 F
b. $108,000 F
c. $360,000 U
d. $1,260,000 F
137. What is
the market-share variance?
a. $360,000 U
b. $1,260,000 F
c. $1,152,000 F
d. $108,000 F
138. More
insight into the flexible-budget variance for direct materials can be gained by
subdividing it into the direct materials
a. mix and volume variances.
b. market-share and market-size variances.
c. mix and yield variances.
d. price and efficiency variances.
139. More
insight into the efficiency variance for direct materials can be gained by
subdividing it into the direct materials
a. mix and volume variances.
b. market-share and market-size variances.
c. mix and yield variances.
d. price and efficiency variances.
140. The
direct materials mix variance will be favorable when
a. the flexible-budget contribution margin is
greater than the actual contribution margin.
b. the actual direct materials input mix is
less expensive than the budgeted direct materials input mix.
c. the actual quantity of total inputs used
is greater than the flexible budget for total inputs.
d. actual unit sales are less than budgeted
unit sales.
141. The
materials yield variance will be unfavorable when
a. the flexible-budget contribution margin is
greater than the actual contribution margin.
b. the actual direct materials input mix is
less expensive than the budgeted direct materials input mix.
c. the actual quantity of total inputs used
is greater than the flexible budget for total inputs.
d. actual unit sales are less than budgeted
unit sales.
142. The
direct materials mix variance is the
a. average of the direct materials mix variances
for each input.
b. sum of the direct materials mix variances
for each input.
c. difference between the direct materials
mix variances for each input.
d. multiple of the direct materials mix
variances for each input.
EXERCISES
AND PROBLEMS
143. 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. Production
facility square footage
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. Indirect
labor-hours per department
Cost pools:
_______ a. Vice President of Finances office
expenses
_______ b. Computer operations used in conjunction
with manufacturing
_______ c. Personnel Department
_______ d. Manufacturing machinery cost
_______ e. Energy costs
144. Handy-Man
Services is a repair-service company specializing in small household jobs. Each
client pays a fixed monthly service fee based on the number of rooms in the
house. Records are kept on the time and material costs used for each repair.
The following profitability data apply to five customers:
Customer
Revenues Customer
Costs
Marveline
Burnett $300 $225
J
Jackson 200 305
Roger
Jones 80 75
Paul
Saas 75 110
Becky
Stephan 350 220
Required:
a. Compute the operating income for each of the
five customers.
b. What options should Handy-Man Services
consider in light of the customer-profitability results?
c. What problems might Handy-Man Services
encounter in accurately estimating the operating costs of each customer?
145. Aromatic Coffee, Inc., sells two types of coffee, Colombian and
Blue Mountain. The monthly budget for U.S. coffee sales is based on a
combination of last year’s performance, a forecast of industry sales, and the
company’s expected share of the U.S. market.
The following information is provided for March:
Actual Budget
Colombian Blue Mountain Colombian Blue
Mountain
Sales in pounds 7,000 lbs. 8,000 lbs. 6,400 lbs. 8,600
lbs
Price per pound $25 $30 $25 $30
Variable cost per pound 11 14 12 13
Contribution margin $14 $16 $13 $17
Budgeted and actual fixed corporate-sustaining costs are
$60,000 and $72,000, respectively.
Required:
a. Calculate
the actual contribution margin for the month.
b. Calculate
the contribution margin for the static budget.
c. Calculate
the contribution margin for the flexible budget.
d. Determine
the total static-budget variance, the total flexible-budget variance, and the
total sales-volume variance in terms of the contribution margin.
146. Harry’s Electronics manufactures TVs and
VCRs. During February, the following
activities occurred:
TVs VCRs
Budgeted units sold 17,640 66,360
Budgeted
contribution margin per unit $90 $156
Actual
units sold 20,000 80,000
Actual
contribution margin per unit $100 $158
Required:
Compute the following
variances in terms of the contribution margin.
a. Determine
the total sales-mix variance.
b. Determine
the total sales-quantity variance.
c. Determine
the total sales-volume variance.
147. Speedy Printing manufactures soft cover
books. For January, the following information is available:
Budgeted market size
(units) 125,000
Budgeted market share 18%
Budgeted average contribution margin per unit $1.20
Actual market size (units) 100,000
Actual market share 19%
Actual average
contribution margin per unit $1.22
Required:
Compute the market-share variance,
the market-size variance, and the sales-quantity variance in terms of the
contribution margin.
148. The Omega Corporation manufactures two
types of vacuum cleaners, the ZENITH for commercial building use and the
House-Helper for residences. Budgeted and actual operating data for the year
20×3 are as follows:
Static Budget ZENITH House-Helper Total
Number sold 15,000 60,000 75,000
Contribution margin $3,750,000 $12,000,000 $15,750,000
Actual Results ZENITH House-Helper Total
Number sold 16,500 38,500 55,000
Contribution margin $6,200,000 $10,200,000 $16,400,000
Required:
a. Calculate
the contribution margin for the flexible budget.
b. Determine
the total static-budget variance, the total flexible-budget variance, and the
total sales-volume variance in terms of the contribution margin.
149. The Omega Corporation manufactures two
types of vacuum cleaners, the ZENITH for commercial building use and the
House-Helper for residences. Budgeted and actual operating data for the year
20×3 are as follows:
Static Budget ZENITH House-Helper Total
Number sold 15,000 60,000 75,000
Contribution margin $3,750,000 $12,000,000 $15,750,000
Actual Results ZENITH House-Helper Total
Number sold 16,500 38,500 55,000
Contribution margin $6,200,000 $10,200,000 $16,400,000
Required:
Compute the sales-mix variance and
the sales-quantity variance by type of vacuum cleaner, and in total. (In terms
of the contribution margin.)
150. The Omega Corporation manufactures two
types of vacuum cleaners, the ZENITH for commercial building use and the
House-Helper for residences. Budgeted and actual operating data for the year
20×3 are as follows:
Static Budget ZENITH House-Helper Total
Number sold 15,000 60,000 75,000
Contribution margin $3,750,000 $12,000,000 $15,750,000
Actual Results ZENITH House-Helper Total
Number sold 16,500 38,500 55,000
Contribution margin $6,200,000 $10,200,000 $16,400,000
Prior to the beginning of the year,
a consulting firm estimated the total volume for vacuum cleaners of the Zenith
and House-Helper category to be 300,000 units, but actual industry volume was
only 275,000 units.
Required:
Compute the market-share variance
and market-size variance in terms of the contribution margin.
121. An
unfavorable market-share variance would MOST likely be caused by a. a competitor providing better service. b. a competitor having distribution problems. c. the company offering products at a lower
price. d. the company experiencing quality-control
problems that get negative media coverage. 122. The
market-size variance results from a difference between the a. actual market share and the budgeted
market share. b. actual contribution margin and the
budgeted contribution margin. c. budgeted contribution margin per composite
unit for the actual mix and the budgeted contribution margin per composite unit
for the budgeted mix. d. actual market size in units and the
budgeted market size in units. 123. The
market-size variance will be unfavorable when a. the flexible-budget contribution margin is
greater than the static-budget contribution margin. b. the actual market share is greater than
the budgeted market share. c. actual market size in units is less than
budgeted market size in units. d. actual unit sales are less than budgeted
unit sales. 124. A
favorable market-size variance would MOST likely be caused by a. the company reducing the services provided
to customers. b. an increase in overall market size. c. a new competitor moving into the area. d. a competitor providing better prices. 125. Reliable
information about market size and market share is available a. for no industries. b. for the management consulting and personal
financial planning industries. c. for the automobile and television
industries. d. for all industries. 126. What is
the market-size variance? a. $500 U b. $1,500 U c. $1,600 F d. $1,000 F 127. What is
the market-share variance? a. $1,000 F b. $1,100 F c. $500 U d. $1,500 U 128. What is
the sales-quantity variance? a. $1,500 U b. $1,000 F c. $500 U d. The variance cannot be determined. 129. What is
the contribution margin for the flexible budget? a. $1,200,000 b. $4,200,000 c. $5,200,000 d. $5,400,000 130. What is
the total static-budget variance in terms of the contribution margin? a. $900 favorable b. $700 favorable c. $200 unfavorable d. $360 unfavorable 131. What is
the total flexible-budget variance in terms of the contribution margin? a. $900 favorable b. $700 favorable c. $200 unfavorable d. $360 unfavorable 132. What
is the total sales-volume variance in terms of the contribution margin? a. $900 favorable b. $1,260 favorable c. $200 unfavorable d. $360 unfavorable133. What
is the total sales-quantity variance in terms of the contribution margin? a. $200 unfavorable b. $900 favorable c. $360 unfavorable d. $1,260 favorable 134. What
is the total sales-mix variance in terms of the contribution margin? a. $200 unfavorable b. $360 unfavorable c. $900 favorable d. $1,260 favorable135. What is
the budgeted contribution margin per composite unit of the budgeted mix? a. $140.625 b. $180.000 c. $208.000 d. $162.500 Answer: b Difficulty: 2 Objective: 8136. What is
the market-size variance? a. $1,152,000 F b. $108,000 F c. $360,000 U d. $1,260,000 F 137. What is
the market-share variance? a. $360,000 U b. $1,260,000 F c. $1,152,000 F d. $108,000 F 138. More
insight into the flexible-budget variance for direct materials can be gained by
subdividing it into the direct materials a. mix and volume variances. b. market-share and market-size variances. c. mix and yield variances. d. price and efficiency variances. 139. More
insight into the efficiency variance for direct materials can be gained by
subdividing it into the direct materials a. mix and volume variances. b. market-share and market-size variances. c. mix and yield variances. d. price and efficiency variances. 140. The
direct materials mix variance will be favorable when a. the flexible-budget contribution margin is
greater than the actual contribution margin. b. the actual direct materials input mix is
less expensive than the budgeted direct materials input mix. c. the actual quantity of total inputs used
is greater than the flexible budget for total inputs. d. actual unit sales are less than budgeted
unit sales. 141. The
materials yield variance will be unfavorable when a. the flexible-budget contribution margin is
greater than the actual contribution margin. b. the actual direct materials input mix is
less expensive than the budgeted direct materials input mix. c. the actual quantity of total inputs used
is greater than the flexible budget for total inputs. d. actual unit sales are less than budgeted
unit sales. 142. The
direct materials mix variance is the a. average of the direct materials mix variances
for each input. b. sum of the direct materials mix variances
for each input. c. difference between the direct materials
mix variances for each input. d. multiple of the direct materials mix
variances for each input. EXERCISES
AND PROBLEMS143. 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. Production
facility square footage 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. Indirect
labor-hours per department Cost pools: _______ a. Vice President of Finances office
expenses _______ b. Computer operations used in conjunction
with manufacturing _______ c. Personnel Department _______ d. Manufacturing machinery cost _______ e. Energy costs 144. Handy-Man
Services is a repair-service company specializing in small household jobs. Each
client pays a fixed monthly service fee based on the number of rooms in the
house. Records are kept on the time and material costs used for each repair.
The following profitability data apply to five customers: Customer
Revenues Customer
Costs Marveline
Burnett $300 $225 J
Jackson 200 305 Roger
Jones 80 75 Paul
Saas 75 110 Becky
Stephan 350 220 Required: a. Compute the operating income for each of the
five customers. b. What options should Handy-Man Services
consider in light of the customer-profitability results? c. What problems might Handy-Man Services
encounter in accurately estimating the operating costs of each customer? 145. Aromatic Coffee, Inc., sells two types of coffee, Colombian and
Blue Mountain. The monthly budget for U.S. coffee sales is based on a
combination of last year’s performance, a forecast of industry sales, and the
company’s expected share of the U.S. market.
The following information is provided for March: Actual Budget Colombian Blue Mountain Colombian Blue
Mountain Variable cost per pound 11 14 12 13 Budgeted and actual fixed corporate-sustaining costs are
$60,000 and $72,000, respectively. Required: a. Calculate
the actual contribution margin for the month. b. Calculate
the contribution margin for the static budget. c. Calculate
the contribution margin for the flexible budget. d. Determine
the total static-budget variance, the total flexible-budget variance, and the
total sales-volume variance in terms of the contribution margin. 146. Harry’s Electronics manufactures TVs and
VCRs. During February, the following
activities occurred: TVs VCRs Budgeted
contribution margin per unit $90 $156 Actual
units sold 20,000 80,000 Actual
contribution margin per unit $100 $158 Required:Compute the following
variances in terms of the contribution margin. a. Determine
the total sales-mix variance. b. Determine
the total sales-quantity variance. c. Determine
the total sales-volume variance. 147. Speedy Printing manufactures soft cover
books. For January, the following information is available: Budgeted market size
(units) 125,000 Budgeted market share 18% Budgeted average contribution margin per unit $1.20 Actual market share 19% Actual average
contribution margin per unit $1.22 Required: Compute the market-share variance,
the market-size variance, and the sales-quantity variance in terms of the
contribution margin. 148. The Omega Corporation manufactures two
types of vacuum cleaners, the ZENITH for commercial building use and the
House-Helper for residences. Budgeted and actual operating data for the year
20×3 are as follows: Number sold 15,000 60,000 75,000 Contribution margin $3,750,000 $12,000,000 $15,750,000 Actual Results ZENITH House-Helper Total Number sold 16,500 38,500 55,000 Contribution margin $6,200,000 $10,200,000 $16,400,000 Required: a. Calculate
the contribution margin for the flexible budget. b. Determine
the total static-budget variance, the total flexible-budget variance, and the
total sales-volume variance in terms of the contribution margin. 149. The Omega Corporation manufactures two
types of vacuum cleaners, the ZENITH for commercial building use and the
House-Helper for residences. Budgeted and actual operating data for the year
20×3 are as follows: Number sold 15,000 60,000 75,000 Contribution margin $3,750,000 $12,000,000 $15,750,000 Actual Results ZENITH House-Helper Total Number sold 16,500 38,500 55,000 Contribution margin $6,200,000 $10,200,000 $16,400,000 Required: Compute the sales-mix variance and
the sales-quantity variance by type of vacuum cleaner, and in total. (In terms
of the contribution margin.) 150. The Omega Corporation manufactures two
types of vacuum cleaners, the ZENITH for commercial building use and the
House-Helper for residences. Budgeted and actual operating data for the year
20×3 are as follows: Number sold 15,000 60,000 75,000 Contribution margin $3,750,000 $12,000,000 $15,750,000 Actual Results ZENITH House-Helper Total Number sold 16,500 38,500 55,000 Contribution margin $6,200,000 $10,200,000 $16,400,000 Prior to the beginning of the year,
a consulting firm estimated the total volume for vacuum cleaners of the Zenith
and House-Helper category to be 300,000 units, but actual industry volume was
only 275,000 units. Required: Compute the market-share variance
and market-size variance in terms of the contribution margin.
