CPP Costing and Profitability Analysis 4

Question 1

Which costing approach accumulates costs by individual customer orders or projects, making it MOST suitable for custom manufacturers?

Accepted Answer

Job-order costing

Answer

Job-order costing tracks costs to specific jobs or orders, making it ideal for custom or made-to-order production environments.

Question 2

A company's net revenue retention (NRR) rate is 115%. What does this BEST indicate about its customer base?

Accepted Answer

Expansion revenue from existing customers exceeds churn losses

Answer

NRR above 100% means upsells and expansions from existing customers more than offset revenue lost to churn and downgrades.

Question 3

When a manufacturing process yields multiple products simultaneously, the method that allocates joint costs based on relative market values at the split-off point is called:

Accepted Answer

Relative sales value method

Answer

The relative sales value method allocates joint costs proportionally to each product's market value at the split-off point.

Question 4

A company raises its price by 8% and unit volume falls by 5%. What is the approximate net impact on total revenue?

Accepted Answer

Revenue increases by approximately 2.6%

Answer

New revenue index = 1.08 × 0.95 = 1.026, so total revenue increases by approximately 2.6%.

Question 5

Which profitability analysis technique assigns costs to customers based on the resources they actually consume, enabling 'whale curve' analysis?

Accepted Answer

Activity-based customer profitability analysis

Answer

Activity-based customer profitability analysis traces resource consumption to individual customers, revealing that a small subset often generates most profit (the whale curve).

(CPP) Certified Pricing Professional Practice Test

(CPP) Certified Pricing Professional Practice Test

CPP Costing and Profitability Analysis 4