CHAPTER 14 QUIZ
1. Which of the following is not a primary purpose given in the text for allocating costs?
a. To provide information for economic decisions
b. To motivate managers and other employees
c. To measure income and assets for reporting to external parties
d. To foster cost awareness among managers to improve decisions
2. Which of the following is considered more of a matter of judgment rather than an
operatioanl criterion?
a. Cause-and-effect
b. Benefits received
c. Fairness or equity
d. Ability to bear
3. Homogeneity is used to
a. develop cost pools in which the costs have the same or similar cost-allocation base.
b. develop cost pools of similar amounts for allocation purposes.
c. develop cost pools based upon similarity of origination of costs to be allocated.
d. develop cost pools only for activity-based costing.
4. Information about price discounting can be useful in analyzing revenues of customers if
a. sales people are properly trained in sales forecasting.
b. records in the information system are kept of reductions in selling price below list price.
c. a strictly enforced company policy is in place regarding volume-based price discounts.
d. sales people are on an incentive plan that is based on revenues.
5. 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?
a. Potential for customer growth
b. Likelihood of customer retention
c. Long-run customer profitability
d. Ability to learn from customer
Use the following information for questions 6 through 8.
Natural Nutrients Bakery of Springfield produces three flavors of cat morsels that have
budgeted and actual sales data for a bag of a dozen of their cat morsels as follows for
December 2008:
Budgeted Data Actual Data
TunaFest ChikBits ChezNips TunaFest 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, they were budgeting to earn a 25 percent market share in
total units (bags) of specially prepared cat treats sold in December 2008 in Springfield.
Reliable industry sources indicate that the total number of bags of cat treats sold for
December 2008 in Springfield was 72,000.
6. The amount of Natural Nutrients Bakery’s sales-volume variance for December 2008 is
a. $3,600 F.
b. $20,200 F.
c. $20,020 F.
d. $29,200 F.
7. The sales-quantity variance for December 2008 for Natural Nutrients Bakery is
a. $3,600 F.
b. $20,200 F.
c. $20,020 F.
d. $29,200 F.
8. The sales-mix variance for December 2008 for Natural Nutrients Bakery is
a. $8,600 F.
b. $8,760 F.
c. $160 F.
d. $180 F.
CHAPTER 14 QUIZ SOLUTIONS
