College of Administration and Finance SciencesInstructions – PLEASE READ THEM CAREFULLY
• The Assignment must be submitted on Blackboard (WORD format only) via allocated
folder.
• Assignments submitted through email will not be accepted.
• Students are advised to make their work clear and well presented, marks may be
reduced for poor presentation.
• Students must mention question number clearly in their answer.
• Late submission will NOT be accepted.
• Avoid plagiarism, the work should be in your own words, copying from students or
other resources without proper referencing will result in ZERO marks. No exceptions.
• All answers must be typed using Times New Roman (size 12, double-spaced) font.
No pictures containing text will be accepted and will be considered plagiarism.
Assignment Question(s):
(Marks 15)
Q1. Assume yourself to be a cost manager of ARAMCO and you are in the task of
Cost Classifications. Explain how the following costs would help you as cost
manager to make decision. (2 Marks)
1. Product Vs Period Cost
2. Prime Vs Conversion Cost
3. Committed Vs Discretionary Cost
Answer:
Q2: A fresh graduate employed as an accountant of a manufacturing company and is
working on over applied and under applied overheads.
1
College of Administration and Finance Sciences
Explain how you would assist him/her in computing over applied and under applied
overheads. Give numerical examples (2 Marks)
Answer:
Q3.a. Latif Company has two products: A and B. The company uses activity-based
costing. The estimated total cost and expected activity for each of the company’s three
activity cost pools are as follows:
Required:
1. Compute POHR per activity (Round off to two decimal places)
2. Calculate the overhead cost per unit, if the company produces 1,000 units of
product A and 500 units of product B. (5 MARKS)
Answer:
Q4. Explain Equivalent Units of Production and its computation using weighted
average method and FIFO method. (2 Marks)
Answer
Q5a. ‘Cost Structure and Profit Stability’ is one of the most import strategy of a
corporations. Explain how managers, maintain cost structure for stability in profit
during both good and bad years. (2 Marks)
Answer:
2
College of Administration and Finance Sciences
Q5b.The following is Allison Corporation’s contribution format income statement
for last month:
Account title
Amount in SR
Sales
850,000
Variable Cost
250,000
Contribution Margin
600,000
Fixed Expenses
450,000
Net operating Income
150,000
The company has no beginning or ending inventories. The company produced and
sold 15,000 units last month.
Required: (2 Marks)
i.
Compute Margin of Safety.
ii.
What is the company’s degree of operating leverage?
Answer:
3