Assignment Question(s):(Marks 15)

Q1.Abdul Karim Company manufactures a product A. The company estimates the cost function for the total costs. The cost driver is number of units. The following information were collected:

MonthUnitsTotal Costs

January3,560SAR 242,400

February3,800SAR252,000

March4,000SAR260,000

April3,600SAR244,000

May3,200SAR228,000

June3,040 SAR221,600

Compute a cost function using the high-low method. (3 Marks)

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Q2. Hashim Corporation sells its product for SAR17 per unit. Its variable cost is SAR10 per unit, and total fixed costs are SAR800. Assuming next period’s estimated sales are 300, calculate the following amounts:

a.Degree of operating leverage(1Mark)

b.Margin of safety in units (1Mark)

c.Margin of safety in revenues (1Mark)

Answer

Q3. TTL Corporation is in the manufacturer of several plastic products. TTL sells its one of the plastic product for SAR 500. The variable costs per unit are SAR 200, and the total fixed costs are SAR 510,000. Based on cost-volume profit analysis, calculate: (6 Marks)

a) Contribution margin per unit and contribution margin ratio.

b) Break-even point in units and sales SAR.

c) Pretax profit if the company sells 2,200 units.

d) Profit/loss if the company sells 1,500 units.

e) Units needed to reach target pretax profit of SAR 180,000.

f) Sales SAR needed to reach the target pretax profit of SAR 180,000.

Answer:

Q4.Which types of companies would most likely use the job costing? Provide example of one Saudi Company.How actual allocation rates and estimated allocation rates are analyzedin these compagnies?(3 Marks)

Answer: