SEU Routine and Non Routine Operating Decisions Questions

College of Administrative and Financial SciencesInstructions – PLEASE 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.
Assignment Question(s):
(Marks. 20)
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
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Direct materials type B
5,000
Marketing
10,000
Total Costs
80,000
Budgeted pretax profit
a.
$
10,000
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 Marks 4)
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:
a. The variable cost per unit
(Ch 2 Marks 4)
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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 Marks 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 Marks 4)
Answer:
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Q5 What do you understand by Activity Based Costing? Explain the process used to assign costs
in an ABC system (Ch 7 Marks 4)
Answer: