25 May Question 86. A common finding in many studies is that a high percentage of operating income is
Question
86. A common finding in many studies is that a high percentage of operating income is
a. contributed by a small number of customers.
b. contributed to evenly by most customers.
c. the result of high discounting.
d. the result of cooperative efforts by many low-volume customers.
87. Loss-causing customers
a. should be eliminated.
b. should be evaluated for ways to become profitable customers.
c. should be retained because each customer adds to long-run profitability.
d. do not exist because additional customer sales always increase profits.
88. Customers are more valuable when they are all EXCEPT
a. well known in the community.
b. expected to continue to do business with a company.
c. in an industry with high-growth potential.
d. require special attention on a regular basis.
89. Dropping an unprofitable customer will
a. eliminate long-run costs assigned to that customer.
b. eliminate most short-run costs assigned to that customer.
c. decrease long-run profitability.
d. increase the potential to cross-sell other products that are more desirable.
90. More insight into the static-budget variance can be gained by subdividing it into
a. the sales-mix variance and the sales-quantity variance.
b. the market-share variance and the market-size variance.
c. the flexible-budget variance and the sales-volume variance.
d. a cost hierarchy.
91. The static-budget variance will be favorable when
a. actual unit sales are less than budgeted unit sales.
b. the actual contribution margin is greater than the static-budget contribution margin.
c. the actual sales mix shifts toward the less profitable units.
d. the composite unit for the actual mix is greater than for the budgeted mix.
92. More insight into the sales-volume variance can be gained by subdividing it into
a. the sales-mix variance and the sales-quantity variance.
b. the market-share variance and the market-size variance.
c. the flexible-budget variance and the market-size variance.
d. a cost hierarchy.
93. The budgeted contribution margin per composite unit for the budgeted mix can be computed by
a. dividing the total budgeted contribution margin by the actual total units.
b. dividing the total budgeted contribution margin by the total budgeted units.
c. dividing the actual total contribution margin by the total actual total units
d. dividing the actual total contribution margin by the total budgeted units.
94. The sales-mix 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.
95. The sales-mix variance will be unfavorable when
a. the actual sales mix shifts toward the less profitable units.
b. the composite unit for the actual mix is greater than for the budgeted mix.
c. actual unit sales are less than budgeted unit sales.
d. the actual contribution margin is greater than the static-budget contribution margin.
96. The sales-mix variance will be favorable when
a. the actual contribution margin is greater than the static-budget contribution margin.
b. actual unit sales are less than budgeted unit sales.
c. the actual sales mix shifts toward the less profitable units.
d. the composite unit for the actual mix is greater than for the budgeted mix.
97. An unfavorable sales-mix variance would MOST likely be caused by
a. a new competitor providing better service in the high-margin product sector.
b. a competitor having distribution problems with high-margin products.
c. the company offering low-margin products at a higher price.
d. the company experiencing quality-control problems that get negative media coverage of low-margin products.
98. A shift towards a mix of products with a lower contribution-margin per unit will MOST likely result in
a. an unfavorable sales-mix variance.
b. an unfavorable sales-quantity variance.
c. a favorable sales-mix variance.
d. a favorable sales-quantity variance.
99. The sales-quantity variance will be unfavorable when
a. the composite unit for the actual mix is greater than for the budgeted mix.
b. actual unit sales are less than budgeted unit sales.
c. the actual contribution margin is greater than the static-budget contribution margin.
d. the actual sales mix shifts toward the less profitable units.
100. A favorable sales-quantity variance would MOST likely be caused by
a. a new competitor providing better service in the high-margin product sector.
b. a competitor having distribution problems with high-margin products.
c. the company offering low-margin products at a higher price.
d. the company experiencing quality-control problems that get negative media coverage of low-margin products.
101. (Actual sales quantity in units – Static budget sales quantity in units) x Budgeted contribution margin per unit =
a. the sales-volume variance.
b. the sales-mix variance.
c. the sales-quantity variance.
d. the market-share variance.
102. The sales-quantity variance results from a difference between
a. the actual sales mix and the budgeted sales mix.
b. the actual quantity of units sold and the budgeted quantity of unit sales in the static budget.
c. actual contribution margin and the budgeted contribution margin.
d. actual market size in units and the budgeted market size in units.
:
103. What is the actual contribution margin for the month?
a. $3,750
b. $4,400
c. $4,250
d. $3,450
104. What is the contribution margin for the flexible budget?
a. $3,750
b. $4,400
c. $4,250
d. $3,450
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