ACCT 301 Saudi Electronic University Cost Accounting Questions

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Business Finance

ACCT 301

Saudi electronic university

ACCT

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College of Administrative and Financial Sciences Assignment 3 Course Name: Cost accounting Student’s Name: Course Code: ACCT 301 Student’s ID Number: Semester: 2 CRN: Academic Year: 1440/1441 H For Instructor’s Use only Instructor’s Name: Students’ Grade: Marks Obtained/Out of Level of Marks: High/Middle/Low Instructions 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 answered 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. Page 1 of 4 Q 1 The accountant for Kadhim Inc. is preparing the budgets for operating department support service costs. Maintenance costs are allocated based on square feet, and cafeteria costs are allocated based on number of employees. The following data have been collected: Support Departments Maintenance Direct costs Square feet Cafeteria SAR50,000 SAR45,000 Number of employees Operating Departments Cutting SAR275,000 Packaging SAR300,000 15 10 150 250 1,500 2,000 3,500 4,000 a- If the direct method is used, calculate maintenance costs allocated to the cutting department? b- If the direct method is used, calculate the total cost (including allocations) for the packaging department? c- Assume you are working for the organization and are requested to allocate support department costs. Describe how you would choose the best method? ( 2 marks) Answer Q 2 Khaleel Compagny produces three products A, B and C. During the year the joint costs of processing the coffee were SAR270,000. Production and sales value information were as follows: Sales Value Product Units at Split-Off Separable Costs Selling Price A 300,000 SAR9 per unit SAR5.00 per unit SAR32 per unit B 200,000 SAR8 per unit SAR3.00 per unit SAR30 per unit C 400,000 SAR7 per unit SAR2.00 per unit SAR20 per unit Page 2 of 4 Chose one method to allocate joint costs and allocate the joint costs. (1 mark) Answer Q3 In a recent accounting period, Ismail Company experienced a SAR30,000 unfavorable variance for variable production costs. Explain the meaning of an unfavorable variance. Suggest two possible (1 mark) Answer Q4 How are budgets related to organizational strategies? (1 mark) Answer Page 3 of 4 Page 4 of 4
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Explanation & Answer

Attached.

Running head: Cost accounting

1

Cost accounting
Name of student
Student’s ID Number
CRN

Cost accounting

2

Question 1
a)
From

To
Maintenance

cafeteria

cutting

package

In SAR

In SAR

In SAR

In SAR

Direct cost

50,000

45000

275000

300000

Maintenance

-50000

23333.33

26666.67

298333.33

326666.67

allocation

total

45000

The maintenance cost to be allocated to the operating department is 50000
Allocation bases for maintenance cost
Square feet
Ratio for allocation (direct method)

3500:4000 which in simplified form is

(cutting to packaging)

7:8

With that, the total ratio is 7+8=15
Fraction allocated to cutting department is 7/15
Total maintenance allocation is 50000
Allocation for cutting department is 7/15*50000=23333.33
b) The statement showing allocation of support department costs to the packaging
department by...


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