SARAB_ACCT322_22

Overview

Assignment (2)

Deadline: Saturday 02/08/2025 @ 23:59

Course Name: Managerial Accounting	Student’s Name:
Course Code: ACCT 322	Student’s ID Number:
Semester: Summer	CRN:
Academic Year: 1446 H/2025 G

For Instructor’s Use only

Instructor’s Name:
Students’ Grade: /15	Level of Marks: High/Middle/Low

Instructions – 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. 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. Why do corporations use variance analysis? Explain how managers compute material variance and labor variance.

Answer:

Q2. Assume that you are preparing a Master Budget for a reputed corporation. Bring out numerical examples on the complete master budget of the corporation.

Answers:

Q3. XYZ Company is considering purchasing new equipment costing SAR 250,000. The company’s management has estimated that the equipment will generate cash flows as follows (SAR):

Year	Net Cash Flow	PV @10%
1	90,000	0.9091
2	75,000	0.8264
3	85,000	0.7513
4	75,000	0.6830

The company's required rate of return is 10%. Calculate the net present value and give reasons on whether the project should be accepted or rejected.

Answer:

Q4a. Assume a company manufactures cars and currently uses only 50% of its manufacturing facility 20,000 cars). The company could utilize more of its facility by producing its own tires. It currently purchases tires at SAR 30 per set of four. If the company would incur SAR14 per set for direct materials, SAR11 for direct labor, and SAR 8 for overhead (variable) to produce the tires.

Required: Compute why the company should, make or buy the tires, in any scenario give your decision why?

Answer:

Q4b. The cost to produce one unit of the product is:

Material SAR 13.00

Labor 8.00

Variable cost 7.00

Fixed expenses 18.00

Total fixed expenses: $ 500,000

The company has received a special order for 20,000 units for a price of SAR 36 per unit from a foreign customer.

Required: Advice the manufacturer on whether the order should be accepted or rejected.

Answer: