Question : 11) Loss-causing customers: A) should be dropped B) should be : 1216969

11) Loss-causing customers:

A) should be dropped

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

12) Customers are more valuable when they are all of the following 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

13) 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

14) Other factors that managers should consider in deciding how to allocate resources among customers include:

A) likelihood of customer retention

B) long-run customer profitability

C) potential for sales growth

D) All of these are correct.

15) The static budget variance is:

A) the difference between an actual result and the budget amount in the static budget

B) the difference between the budget amount in the static budget and the amount in the flexible budget

C) the difference between an actual result and the flexible budget amount

D) the difference between the static budget amount and the sales volume variance.

16) 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

17) 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

18) 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

19) The budgeted contribution margin per composite unit for the budgeted mix can be computed by dividing the:

A) total budgeted contribution margin by the actual total units

B) total budgeted contribution margin by the total budgeted units

C) actual total contribution margin by the total actual total units

D) actual total contribution margin by the total budgeted units

20) 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