Overview
- 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. This includes filling your information on the cover page.
- 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.
- Submissions without this cover page will NOT be accepted.
Assignment Question(s): (Marks 15)
Q1. Al-Rabea prepares budgets for the quarter ending June 30. Sales in units: April 5,000, May 6,000, June 5,5000, July 5,000. Selling price is SR 6 per unit, inventory in March 31, is 600 units. Desired ending inventory is 20% of the next month sales.
Assume sales are on account. Al-Rabea’s collection pattern is:
75% collected in the month of sale,
25% collected in the month following sale,
In April, the March 31st accounts receivable balance of SR20,000 will be collected in full.
Required: Prepare sales, production and cash collection budget for April, May & June.
Answer:
Q2. Costs that are relevant in one decision situation may not be relevant in another context. Explain at least two such situations for different decision with numerical examples.
Answer
Q3. The Phelps Company applies overhead costs to products on the basis of standard direct labor-hours. The standard cost card shows that 5 direct labor-hours are required per unit of product. Phelps Company had the following budgeted and actual data for March:
The budgeted direct labor-hours is used as the denominator activity for the month. Calculate the variable overhead efficiency variance for March.
Answer
Q4. From the following data calculate the net present vale of a proposed investment and decide whether the proposal is accepted or rejected:
Cost of the Investment SAR 25,000
Annual cost savings SAR 7,000
Estimated salvage value SAR 2,000
Life of the project 8 years&discount rate 16%
| Year | 16% factor |
| current | 1.000 |
| 1-8 years | 4.344 |
| 8th year | 0.305 |
Answer: