Question

Unfavorable flexible budget variances for costs do not necessarily mean that costs are mismanaged if ________.

Question 7 options:

	high quality materials were used to reduce waste
	actual wage rate increases for labor union workers are not reflected in standard wage rates
	high quality materials were used to increase product quality
	all of the above

The following information is available for Discounted Supplies Inc. and its two divisions, Cheap Goods and Expensive Goods.

Whole Cheap Expensive
Company Goods Goods
Net sales $100,000 $50,000 $50,000
Fixed costs controllable by
Division Manager 16,500 12,500 4,000
Fixed costs not controlled by
Division Manager 8,000 5,000 3,000
Variable costs:
Cost of merchandise sold 24,500 17,500 7,000
Operating expenses 16,400 10,000 6,400
Unallocated costs 1,000

What is the contribution by segment for the Expensive Goods Division?

Question 9 options:

	$36,600
	$32,600
	$29,600
	$28,600

Question 10 (3 points)

Sonny Corporation and Cher Corporation are movie companies. Comparative data for 20X0 and 20X1 are given below:

Sonny Cher
Corporation Corporation
Sales revenue 20X0 $8,000,000 $4,400,000
20X1 9,600,000 6,175,000

Number of employees 20X0 10,000 5,500
20X1 9,000 6,500

Assume that each 20X0 dollar is equivalent to 1.60 of each 20X1 dollar, due to inflation. Taking inflation into account, what is Sonny Corporation's 20X0 productivity measure in terms of revenue per employee?

Question 10 options:

	$1,600.00
	$1,083.08
	$1,422.22
	$1,280.00

Lou Company's records reveal the following:
Division X
Market price of finished component to outsiders $32
Variable costs per component $24
Contribution margin per component $8

Division Y
Sale price of finished product $42
Variable costs:
Division X(1 component) 24
Division Y Assembly 9
Division Y Packaging 4
Contribution margin per unit $5

The variable costs of Division Y will be incurred whether it buys from Division X or from an outside supplier. Division X wants to transfer the components to Division Y for $34 each. Division Y can buy the component for $32 per unit from an outside supplier. Division X has no excess capacity. The manager of Division Y should ________.

Question 11 options:

	buy the components from Division X at $34 each
	buy the components from an outside supplier for $33 each
	buy the components from the outside supplier for $32 each
	none of the above

Answer 1

Question 7 -

Answer: Unfavorable flexible budget variances for costs do not necessarily mean that costs are mismanaged if - ALL THE ABOVE

Question 9 - What is the contribution by segment for the Expensive Goods Division?

Answer: $36,600

Working:

Net sales	50000
Variable cost:
Cost of merchandise	7000
Operating expenses	6400
Contribution [Net sales - Variable costs]	36600

Question 10 - Sonny Corporation's 20X0 productivity measure in terms of revenue per employee

Answer : $1280

Working:

Sales	20X0	20X1
Sony Corp	8000000	9600000
Cher Corp	4400000	6175000
Number of employees	20X0	20X1
Sony Corp	10000	9000
Cher Corp	5500	6500
Productivity measure of Sony in 20X0 in terms of revenue per employee	1280
	[(Revenue in 2020*Inflation factor of 1.6)/Number of employees]

Question 11 -

Answer: Division Y's manager should buy the components from the outside supplier for $32 each since the price offered by Division X is $34 which is more than the outside price.

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