AZAM_ACCT301_2

Assignment Question(s):(Marks

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15

)

Q1.What is the process of identifying activities in an organisation and assigning costs under the Activity Based Costing (ABC) system? Elucidate. You will need to include the right numerical examples to support your answer.(2 Marks)(Chapter 7, Week 7)

Answer:

Q2. PPLC Company has two support departments,

SD1

and

SD2

, and two operating departments,

OD1

and

OD2

. The company decided to use the direct method and allocate variable SD1 dept. costs based on the number of transactions and fixed SD1 dept. costs based on the number of employees. SD2 dept. variable costs will be allocated based on the number of service requests, and fixed costs will be allocated based on the number of computers.The following information is provided: (4 Marks)(Chapter 8, Week 10)

Support Departments

SD1

OD2

Total Department variable costs

35

,000

Total department fixed costs

30

,000

Number of transactions

100

Number of employees

30

Number of service requests

25

28

Operating Departments
SD2	OD1
18 ,000	19,000	51,000
20 ,000	24 ,000	56,000
30	40	200
14	18	35
28	18	35
Number of computers	15	20	24

You are required to allocate variable and fixed costs using direct method.

Answer:

Q3. What are an organization’s “outsourcing decisions” and “constrained resource decisions?” Provide a suitable numerical example of these decisions and explain how quantitative and qualitative considerations support a company’s decision-making process.

(2 Marks)(Chapter 4, Week 9)

Note: Your answer must include suitable numerical examples. You are required to assume values of your own, and they should not be copied from any sources.

Answer:

Q4.VBN plastic industrymakes three plastic toys:

T1

,

T2

, and

T3

. The joint costs of the three products in 2017 were SAR 120,000. The total number of units for each product and the selling price per unit is given below:(3 Marks)(Chapter 9, Week 11)

Product

T1

SAR 15

T2

SAR 14

SAR 10

Units	Selling Price per unit
45,000
26,000
T3	18,000

You are required to allocate the joint costs to each product using the physical volume method and sales value at the split-off method.

Answer:

Q5.MN&M Corporation is preparing a budget for 2018. The company provides you with the following details which will help you to prepare the budget:

(4 Marks) (Chapter 10, Week 12)

Budgeted selling price per unit = SAR 500 per unit

Total fixed costs = SAR 150,000

Variable costs = SAR 100 per unit

Required:

You are required to prepare a flexible budget for 1,000, 1,100, 1,200 and 1,300 units.

Answer: