Assignment Question(s): (Marks 15)
Q1. What are non-routine
operating decisions? Explain with suitable numerical examples how
companies decide to take the following decisions: (3 Marks)
i. Keep or drop decisions
ii. Constrained Resource Decisions (Two Products; One Scarce Resource)
Note:
Your answer must include numerical examples for these two decisions.
You are required to assume values of your own and they should not be
copied from any sources.
(Chapter 4)
Answer:
Q2. a) What are the differences between single and dual rate allocation? Explain with suitable examples. (2 Marks)
b)
Provide a numerical example for single rate allocation and dual rate
allocation and explain the process of allocating support department
costs to the operating department, assuming that:
Note:
You are required to provide numerical examples assuming the values of
your own and they should not be copied from any sources. (Chapter 8)
Answer:
Q3.
OFL Ltd. manufactures plastic products and makes three products, P1, P2
and P3. In 2016, the joint costs of three products were SAR 135,000.
Following are the details related to the number of units and selling
price per unit: (4 Marks)
Product Units Selling Price per unit
P1 6,000 SAR 30
P2 3,000 SAR 20
P3 1,000 SAR 15
Allocate the joint costs to each product using: (Chapter 9)
i. Physical volume method
ii. Sales value at the split-off method
Answer:
Q4. The following data are related to FDL Company for the year 2017: (4 Marks)
Budgeted selling price per unit = SAR 425 per unit
Total fixed costs = SAR 84,000
Variable costs = SAR 110 per unit
You are required to prepare a flexible budget for 400, 500, 600 and 700 units. (Chapter 10)
Answer:
The company has two support departments “S1 & S2” and two operating departments “O1 & O2.”
The company use the direct method to allocate support department costs. (2 Marks)
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