Assignment Question(s):(Marks. 20)
Q1. Jassim Compagny is producing only one product. Two types of direct materials are used to
produce this product: direct material type A and direct material type B.
The estimated data for Jassim Compagny is as following:
Sales
$90,000
Costs:
Direct materials type A
$40,000
Hourly employees
15,000
Manager’s salary
10,000
Direct materials type B
5,000
Marketing
10,000
Total Costs
80,000
Budgeted pretax profit
a.
$
10,000
Compute the revenues needed to achieve a target after-tax income of $30,000. The income
tax rate is 20%.
b.
What is the margin of safety in revenue?
(Ch 3 Marks 4)
Answer
Q2 Abdulwahab Corporation is estimating the cost function for total cost of production of product
A using the high-low method. The data collected for the past year is as following:
Quarter
Number of units
Total
produced
Costs
1
4,000
$ 1,000
2
5,400
1,280
3
7,000
1,600
4
9,000
2,000
Calculate the following amounts:
(Ch 2 Marks 4)
a. The variable cost per unit
b. The fixed cost
c. Explain the method used by the company to estimate the cost function. Suggest other methods
than may be used to estimate cost function.
Answer:
Q3. Differentiate between routine and non-routine operating decisions made by managers. Explain
two types of non-routine decisions with numerical examples. (Ch 4 Marks 4)
Answer
Q4. Huda Corporation’s accounting information system showed the following balances at the end
of this period:
Work in process
$40,000
Finished goods
60,000
Cost of goods sold
100,000
Miss-applied overhead this period totaled $60,000; Huda maintains a single overhead
account in its general ledger. If the miss-applied overhead is considered material, prepare the
journal entry to record its disposition.
Discuss why you could have Misallocated Overhead? (Ch 5 Marks 4)
Answer:
Q5 What do you understand by Activity Based Costing? Explain the process used to assign costs
in an ABC system (Ch 7 Marks 4)
Answer:
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