Q1. Jassim Compagny is producing only one product. Two types of direct materials are used to produce this product: direct material type( A) and direct material type B.

The estimated data for Jassim Compagny is as following:

Sales $90,000

Costs:

Direct materials type (A) $40,000

Hourly employees 15,000

Manager's salary 10,000

Direct materials type B 5,000

Marketing 10,000

Total Costs 80,000

Budgeted pretax profit $ 10,000

a. Compute the revenues needed to achieve a target after-tax income of $30,000. The income tax rate is 20%.

b. What is the margin of safety in revenue?

(Ch 3 )

Answer

Q2 Abdulwahab Corporation is estimating the cost function for total cost of production of product A using the high-low method. The data collected for the past year is as following:

Number of units Total

Quarter produced Costs

1 4,000 $ 1,000

2 5,400 1,280

3 7,000 1,600

4 9,000 2,000

Calculate the following amounts: (Ch 2)

a. The variable cost per unit

b. The fixed cost

c. Explain the method used by the company to estimate the cost function. Suggest other methods than may be used to estimate cost function.

Answer:

Q3. Differentiate between routine and non-routine operating decisions made by managers. Explain two types of non-routine decisions with numerical examples. (Ch 4 )

Answer

Q4. Huda Corporation's accounting information system showed the following balances at the end

of this period:

Work in process $40,000

Finished goods 60,000

Cost of goods sold 100,000

Miss-applied overhead this period totaled $60,000; Huda maintains a single overhead account in its general ledger. If the miss-applied overhead is considered material, prepare the journal entry to record its disposition.

Discuss why you could have Misallocated Overhead? (Ch 5)

Answer:

Q5 What do you understand by Activity Based Costing? Explain the process used to assign costs in an ABC system (Ch 7 )

Answer: