FMGT 4210 Chapter 16
Revenue Allocation - ANS-Occurs when revenues are related to a particular revenue object but
cannot be traced to it in an economically feasible way.
Product Bundle - ANS-The combination of two or more goods and/or services provided on a per
customer basis. (Think videogame console that comes with an extra remote and game).
Stand-Alone Revenue Allocation Method - ANS-An allocation method that uses product-specific
info pertaining to products in the bundle to determine the weights used to allocated the bundled
revenues to those individual products.
Incremental Revenue-Allocation Method - ANS-Ranks individual products in the bundle
according to criteria determined by management - such as the product in the bundle with the
most sales - and then uses this ranking to allocate bundled revenues to individual products.
Zero-Sum Game - ANS-A situation in which one person's gain is another's loss.
Customer Cost Analysis - ANS-Identifies cost activities and cost drivers related to servicing
customers.
Price Discounting - ANS-Reduction in the price of the product with the intent to stimulate the
sale of the product over a defined period of time.
= Actual Results - Static Budget Amount - ANS-Static-Budget Contribution Margin Variance
(Formula)
= Actual Results - Flexible-Budget Amount - ANS-Flexible-Budget Contribution Margin Variance
(Formula)
= (Actual Sales Qty in Units - Static-Budget Sales qty in Units) x Budgeted CBM Per Unit -
ANS-Sales Volume Contribution Margin Variance (Formula)
Sales-Mix Contribution Margin Variance - ANS-Level 3 Variance Analysis: the difference
between the budgeted amount for the actual sales mix and the budgeted amount for the
budgeted sales mix.
Composite Unit - ANS-A hypothetical unit with weights based on the mix of individual units.
Sale-Quantity Contribution Margin Variance - ANS-The difference between the budgeted CM
based on actual units sold of all products and the budgeted mix, and the CM in the
Static-Budget.
Revenue Allocation - ANS-Occurs when revenues are related to a particular revenue object but
cannot be traced to it in an economically feasible way.
Product Bundle - ANS-The combination of two or more goods and/or services provided on a per
customer basis. (Think videogame console that comes with an extra remote and game).
Stand-Alone Revenue Allocation Method - ANS-An allocation method that uses product-specific
info pertaining to products in the bundle to determine the weights used to allocated the bundled
revenues to those individual products.
Incremental Revenue-Allocation Method - ANS-Ranks individual products in the bundle
according to criteria determined by management - such as the product in the bundle with the
most sales - and then uses this ranking to allocate bundled revenues to individual products.
Zero-Sum Game - ANS-A situation in which one person's gain is another's loss.
Customer Cost Analysis - ANS-Identifies cost activities and cost drivers related to servicing
customers.
Price Discounting - ANS-Reduction in the price of the product with the intent to stimulate the
sale of the product over a defined period of time.
= Actual Results - Static Budget Amount - ANS-Static-Budget Contribution Margin Variance
(Formula)
= Actual Results - Flexible-Budget Amount - ANS-Flexible-Budget Contribution Margin Variance
(Formula)
= (Actual Sales Qty in Units - Static-Budget Sales qty in Units) x Budgeted CBM Per Unit -
ANS-Sales Volume Contribution Margin Variance (Formula)
Sales-Mix Contribution Margin Variance - ANS-Level 3 Variance Analysis: the difference
between the budgeted amount for the actual sales mix and the budgeted amount for the
budgeted sales mix.
Composite Unit - ANS-A hypothetical unit with weights based on the mix of individual units.
Sale-Quantity Contribution Margin Variance - ANS-The difference between the budgeted CM
based on actual units sold of all products and the budgeted mix, and the CM in the
Static-Budget.
