Questions from Cost Accounting

Q: How can the concept of a composite unit be used to explain

How can the concept of a composite unit be used to explain why an unfavorable total sales-mix variance of contribution margin occurs?

Q: How can the sales-quantity variance be decomposed further?

How can the sales-quantity variance be decomposed further?

Q: “A customer-profitability profile highlights those customers a company should

“A customer-profitability profile highlights those customers a company should drop to improve profitability.” Do you agree? Explain.

Q: Give examples of three different levels of costs in a customer-

Give examples of three different levels of costs in a customer-cost hierarchy.

Q: “A company should not allocate all of its corporate costs to

“A company should not allocate all of its corporate costs to its divisions.” Do you agree? Explain.

Q: What criteria might managers use to guide cost-allocation decisions?

What criteria might managers use to guide cost-allocation decisions? Which are the dominant criteria?

Q: “Once a company allocates corporate costs to divisions, these costs

“Once a company allocates corporate costs to divisions, these costs should not be reallocated to the indirect-cost pools of the division.” Do you agree? Explain.

Q: Distinguish between the single-rate and the dual-rate methods

Distinguish between the single-rate and the dual-rate methods.

Q: What are the challenges of using the incremental cost allocation method when

What are the challenges of using the incremental cost allocation method when allocating common costs and how might they be overcome?

Q: Why might an analyst incorporate the industry-market-size factor

Why might an analyst incorporate the industry-market-size factor and the interrelationships among the growth, price-recovery, and productivity components into a strategic analysis of operating income?...