Answer each of the following questions/statements by circling the correct letter and writing it in the blank. Please show ALL work for partial/full credit. (3 pts each) 1) Which of the following classifications would the cost of visiting customers would most likely fit into? A) customer output unit-level cost B) customer batch-level cost C) customer-sustaining cost D) corporate-sustaining cost 2) Which of the following classifications would costs incurred to handle each unit sold fit into? A) customer output unit-level cost B) customer batch-level cost C) customer-sustaining cost D) corporate-sustaining cost 3) Customers making large contributions to the profitability of the company should A) be treated the same as other customers because all customers are important B) receive a higher level of attention from the company than less profitable customers C) be charged higher prices for the same products than less profitable customers D) not be offered the volume-based price discounts offered to less profitable customers 4) Price discounts are influenced by A) the volume of product purchased B) the prime cost of production C) the operational budget D) the contribution -margin per unit 5). Managers use a customer-profitability analysis report to ensure that A) unpaid invoices are categorized according to age by due date B) costs related to customers are segmented into different cost pools on the basis of different types of cost drivers or cost-allocation bases C) customers making large contributions to the operating income of a company receive a high level of attention from the company D) cost allocation of indirect cost is in place 6) categorizes costs related to customers into different cost pools on the basis of either different classes of cost drivers or different degrees of difficulty in determining the cause-and-effect (or benefitsreceived) relationships. A) Customer-profitability analysis B) Customer revenues C) Customer cost hierarchy. D) Price discounting 7) A customer cost hierarchy categorizes costs related to customers into different cost pools on the basis of different A) contribution-margin ratios of products B) distribution-channel costs C) levels of cause-and-effect relationships D) division-sustaining costs 8) To guide cost allocation decisions, the fairness or equity criterion A) considers reasonableness as a matter of judgment rather than an operational criterion B) allocates cost among the beneficiaries in proportion to the benefits each receives C) is used more frequently than any other criteria D) is the primary criterion used in activity-based costing 9) Which of the following criteria has the presumption that the more-profitable divisions have a greater ability to absorb corporate administration costs? A) the fairness or equity criterion B) the ability to bear criterion C) the cause-and-effect criterion D) the benefits-received criterion 10) The Conity Corporation has an Electric Mixer Division and an Electric Lamp Division. Of a $13,000,000 bond issuance, the Electric Mixer Division used $9,500,000 and the Electric Lamp Division used $3,500,000 for expansion. Interest costs on the bond totaled $975,000 for the year. What amount of interest costs should be allocated to the Electric Mixer Division? (Round any intermediary calculations two decimal places and your final answer to the nearest dollar.) A) $563,333 B) $711,750 C) $3,500,000 D) $9,500,000
