Assignment (1)
Assignment Questions: (Marks 15)
- A company provided the following information regarding its units produced and total cost incurred:
| Units Produced | Total Cost (SAR) |
| 5000 | 20,000 |
| 7400 | 27,200 |
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Start My OrderUsing Two-Point Method you are required to determine: (2+2+1 Marks)
- Variable Cost per unit
- Total Fixed Cost
- Cost Function
- Bill’s Briefcases makes high quality cases for laptops that sell for $200. The variable costs per briefcase are $80, and the total fixed costs are $360,000. Currently bill’s salespersons have salaries totaling $80,000 (included in Fixed Cost of $360,000) and earn a 10% commission on each unit ($20 per briefcase). He is considering an alternative compensation arrangement where the salaries are decreased to $30,000 and the commission is increased to 20% ($40 per briefcase).
You are required to: (2+3 Marks)
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- Compute the Break Even Point in units under the proposed alternative.
- Compute the volume of sales in units for which Bill is indifferent between the two alternatives.
- Prepare Journal Entries from the following information relating to Job Costing.
- The material storeroom receives a shipment of direct and indirect materials that cost $ 12,000.
- Materials are sent to the stamping and assembly areas. The Cost of the direct materials is $ 1,500 and the cost of the indirect materials is $ 900.
- Wages totaling $ 2,000 are accrued; 70 % of these costs are direct labour and 30% are indirect labour.
- Overhead costs are allocated to work in process using an allocation rate of 150% of direct labour costs.
- Job No. 1205, with a total cost of $ 2,500 is completed.
(5 X1 Mark)
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