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Assignment Question(s): (Marks 10)
Q1. Abdelaziz Co. produces 3 types of products. (3 marks)
During the year the joint costs of processing the 3 products were $350,000.
Production and sales value information were as follows:
Product Units produced at Split-Off Separable Costs Selling Price
Product A 400,000 $10 per unit $6.00 per unit $40 per unit
Product B 300,000 $9 per unit $4.00 per unit $28per unit
Product C 500,000 $6 per unit $3.00 per unit $18 per unit
a. Allocate the joint costs using the physical output method.
b. Allocate the joint costs using the net realizable value method.
c. Allocate the joint costs using sales value at split-off point method.
Q2. Fadel, Inc. allocates engineering costs on the basis of the supervisor’s time and administration costs on the basis of the number of employees.
The following data have been collected:
Support Departments Operating Departments
Engineering Administration Operating 1 Operating 2
Department costs $25,000 $15,000 $200,000 $350,000
Number of employees 15 10 300 450
Engineering supervisor’s time 30 hours 15 hours 35 hours 20 hours
Use the direct method to allocate support department costs to the different departments. (3 marks)
Q3. Rafique Inc. makes product A and sells at selling price of SAR 45 per unit. Badr Inc. wants to buy 5,000 units at SAR 27 per unit. Rafique Inc. has a normal capacity of 101,000 units and projected sales to regular customers this year is 92,000 units. Per unit costs traceable to the product (based on normal capacity of 92,000 units) are listed below?
Direct Materials 8.1
Direct Labor ` 6.0
Variable Mfg. Overhead 6.2
Fixed mfg. overhead 4.8
Fixed administrative costs 0.8
Fixed Selling Costs 0.4
Does the quantitative analysis suggest that the company should accept the special order? (2 marks)
Q4. XYZ Co. is preparing a budget for 2018. The budgeted selling price per unit is 60 SR, and total fixed costs for 2018 are estimated to be 1,500,000 SR. Variable costs are budgeted at 20 SR/unit.
You are working in accounting department of XYZ, prepare a flexible budget for the volume levels 120,000, 130,000, and 140,000 units.
One internship student having his training in XYZ Co requested you to explain to him the difference between static and flexible budgets and arguments of using each one of them? (2 marks)
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