Assignment Question(s):(Marks 15)
Assignment Question(s):(Marks 15)
Q1. Discuss with suitable examples why activity-based costing (ABC) is better than the traditional costing system. Provide a suitable numerical example of ABC in the manufacturing sector and show all the necessary calculations required under the ABC system.
(3 Marks)
Note: Your answer must include suitable numerical examples showing all the calculations of the ABC system. You are required to assume values of numerical examples of your own and they should not be copied from any sources.(Chapter 7)
Answer:
Q2. “A non-routine decision is one that is taken in response to a non-repetitive, operational scenario.” Comment on this statement and explain with suitable examples the various types of non-routine operating decisions that a company makes under such a scenario. Support your answer with numerical examples along with qualitative considerations involved in making such decisions.(4 Marks)
Note: Your answer must include suitable numerical examples for various types of non-routine operating decisions. You are required to assume values of numerical examples of your own and they should not be copied from any sources.(Chapter 4)
Answer:
Q3. ADLG Company has two support departments, SS1 and SS2, and two operating departments, OD1 and OD2. The company has decided to use the direct method and allocate variable SS1 dept. costs based on the number of transactions and fixed SS1 dept. costs based on the number of employees. SS2 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 values have been extracted for the allocation:(4 Marks)
Support Departments
Operating Departments
SS1
SS2
OD1
OD2
Total Department variable costs
16,000
19,000
105,000
68,000
Total department fixed costs
19,500
34,000
120,000
55,000
Number of transactions
50
55
250
140
Number of employees
18
24
47
38
Number of service requests
37
22
26
32
Number of computers
20
25
31
37
You are required to allocate variable and fixed costs.(Chapter 8)
Answer:
Q4. JKL Company processes a direct material and produces three products: P1, P2, and P3. The joint costs of the three products in 2018 were SAR 120,000. The total number of units for each product and the selling price per unit is given below: (4 Marks)
Product
Units
Selling Price per unit
P1
55,000
SAR 70
P2
34,500
SAR 58
P3
10,500
SAR 44
You are required to use the physical volume method and sales value at the split-off method to allocate the joint costs to each product.(Chapter 9)
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