Analyze the three following graphs. Explain how these graphs will be useful for managers. Discuss the other uses of CVP Analysis.

Discuss the basic assumptions for CVP analysis

SABIC is developing a cost function for its maintenance costs using the high-low method.The following data have been collected for the past year:

Direct LaborMaintenance

QuarterHoursCosts Incurred

15,000$745

26,500820

37,000850

48,0001,000

Calculate the following amounts:

a.The variable cost per direct labor hour

b.The fixed cost

c.The estimated total cost for 9,000 direct labor hours

d.The estimated total cost for 6,000 direct labor hours

Prepare Journal Entries from the following information relating to Job Costing.

a)The material storeroom receives a shipment of direct and indirect materials that cost $ 12,000.

b)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.

c)Wages totalling $ 2,000 are accrued; 80 % of these costs are direct labour and 20% are indirect labour.

d)Overhead costs are allocated to work in process using an allocation rate of 150% of direct labour costs.

e)Job No. 1205, with a total cost of $ 2,500 is completed.

f)Job No. 1205 is shipped to the customer, who is billed for $ 5,000.

(A) How is overhead cost allocated in job costing?

(B) Discuss the Treatment of Normal an Abnormal Spoilage under Job Costing.

The salespersons in Omar Co. have total salaries of $140,000 (included in F of $600,000) and earn a 5% commission on each mobile phone ($30 included in V). The alternative plan was to decrease salaries to $60,000 and increase the commission to 18% ($110 per mobile phone).

A.Compute the BEP in units under the proposed alternative.

P = $600 and V = $320.

B.Compute the volume of sales, in units, for which Omar Co. is indifferent between the two alternatives.

C.Draw a CVP graph for Omar Co. that displays the costs under both alternatives.