Question 1: Not-for-profit Accounting (30 marks) City Youth Services (adapted from CMA Entrance Exam Syllabus 2006)
City Youth Services (CYS) is a not-for-profit organization established to provide counselling and other services to children under the age of 18. It concentrates on troubled…show more content… Calculate the customer-level operating income for each customer by preparing a customer profitability analysis (similar to Exhibit 16-7 on page 808 of Reading 8 in your textbook). Rank the customers according to profitability. (10 marks)
b. Are any customers unprofitable? What is causing this? What should Alana’s do with respect to these customers? (5 marks)
Question 3: Sales Variances (15 marks)
The Chair Company manufactures two modular types of chairs: one for the residential (home) market and the other for the office market. Budgeted and actual operating data for the year 2011 are:
Static Budget Actual Results
Home Office Home Office
Number of chairs sold 260,000 140,000 248,400 165,600
In late 2010, an office-products research firm estimated the industry volume for residential and office chairs of the type sold by the Chair company to be 2,400,000. Actual industry volume for the year 2011 was 2,200,000 chairs.
Required:
a. Compute the sale-mix variance and the sales-quantity variance by type of chair, and in total. (6 marks)
b.
