Overview
Assignment Questions: (Marks 15)
1.Metro Toys are making two types of toys namely ‘Supreme’ and ‘Deluxe’. Metro Toys has only 200,000 machine hours available per year. The following information is provided for both the products.
|
Supreme |
Deluxe |
|
|
Selling Price per unit |
SAR 50 |
SAR 30 |
|
Variable Cost Per Unit |
SAR 25 |
SAR 10 |
|
Required Machine Hours/Unit |
8 |
2 |
Required:
a)Determine the Total Contribution Margin in SAR if Only ‘Deluxe’ Toys are produced. (2.5 Marks)
b)Determine the Total Contribution Margin in SAR if Only ‘Supreme’ Toys are produced. (2.5 Marks)
Solution:
2.Akbar Inc. has two support departments (Accounting and Information Technology) and Two Operating Departments of Producing Plastic Products and Metal Products. The cost information of all these departments and allocation bases are given below:
|
Support Department |
Operating Department |
||||
|
Accounting |
Information Technology |
Plastic Products |
Metal Products |
Total |
|
|
Cost (SAR) |
40,000 |
64,000 |
120,000 |
160,000 |
384,000 |
Possible Allocation Bases:
Support Department | Operating Department | ||||
Accounting | Information Technology | Plastic Products | Metal Products | Total | |
No. of Employees | 5 | 8 | 15 | 25 | 53 |
No. of Computers | 24 | 36 | 320 | 480 | 860 |
Accounting Department’s Cost will be allocated using number of employees and Information Technology Department’s cost will be allocated using number of computers.
Required:
Allocate the Support Department Cost to Operating Department using Direct Method.
(Step by Step Calculation is required). (5 Marks)
Note: Show your solution through table.
Solution:
3.Freshly Juice company produces three products differently. These products are jointly produced upto certain stage and then after they are identified separately. The joint cost of processing these products are SAR 160,000. You are required to allocate this Joint Cost among the three different product by using the following methods.
a)Sales Value at Split Off Method (2.5 Marks)
b)Net Realizable Value (NRV) Method (2.5 Marks)
The quantitative information of these products are as follows:
Products | KG Produced | Selling Price Per KG at Split Off | Final Sale Value | Separable Cost |
A | 20,000 | SAR 1.2 | 70,000 | 6,000 |
B | 40,000 | SAR 1.4 | 94,000 | 9,000 |
C | 80,000 | SAR 0.8 | 80,000 | 10,000 |
Note: Show your solution through table.
Solution: