SEU Accounting Variable and Absorption Costing Question

User Generated

xunyvq18

Business Finance

Saudi Electronics University

Description

Q 1. What do you mean by Variable and Absorption Costing? Explain both with suitable example.[2 marks]

Answer:

Q2. Hamed Company is preparing budgets for the quarter ending June 30, 2019.

Budgeted sales in units for the next five months are:

April

May

June

July

20,000

50,000

30,000

25,000

Required:

  • Prepare Sales budget for April, May & June assuming selling price per unit is SR 15.
  • Prepare production budget for April, May & June if the company wishes ending inventory as

[2 marks]

10 % of next month sales units.[2 marks]

Answer:

Q3. Ayob Company’s projected profit for the coming year is as follows:

Sales SAR 200,000 with Price per unit SAR 20, Total Variable cost SAR 120,000 with Variable cost per unit SAR 12 and fixed expenses are SAR 64,000

  • Compute the break-even point in units.[1 mark]
  • How many units must be sold to earn a profit of SAR 30,000?[1 mark]

Q4. Ismail Company sells several products. Information of Revenues and Costs are as follows:

Selling price per unitSAR20

Variable cost per unit is including:

Direct materials per unitSAR4

Direct manufacturing labor per unitSAR1

Variable Manufacturing cost per unit SAR1

Variable Selling costs per unitSAR2

Total annual fixed costs SAR96, 000

a. Calculate the contribution margin per unit [0.5 mark]

b. Calculate the Contribution Margin Ratio. [0.5 mark]

c. Calculate the breakeven point in total sales dollars a [1 mark]

Explanation & Answer:
2 pages
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Explanation & Answer

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1

Assignment

Student’s Name
Department, Institutional Affiliation
Course Code: Course Name
Instructor’s Name
Due Date

2
Question One
The variable costing method only considers the direct costs associated with a product
when determining the total product costs (Drury, 2018). Fixed costs that are incurred by an
organization are not included in product costs. Direct costs are ones that can be traced to the final
product manufacture...


Anonymous
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