Description
Q1. Differentiate with suitable examples the traditional costing systems and activity-based costing. Explain how ABC is used in manufacturing by providing a numerical example.
Q2. RCR has two support departments, X1 and X2, and two operating departments, Z1 and Z2. RCR has decided to use the direct method and allocate variable X1 dept. costs based on the number of transactions and fixed X1 dept. costs based on the number of employees. X2 dept. variable costs will be allocated based on the number of service requests and fixed costs will be allocated based on the number of computers.The following information is provided:(Week 9, Chapter 8)(4 Marks)
Support Departments
Operating Departments
X1
X2
Z1
Z2
Total Department variable costs
12,500
15,000
95,000
52,500
Total department fixed costs
14,500
27,500
105,000
45,000
Number of transactions
38
45
175
112
Number of employees
14
18
38
30
Number of service requests
30
18
38
25
Number of computers
15
20
25
30
You are required to allocate the variable and fixed costs.
Q3. Provide a numerical example of special order decisions and make or buy decisions and explain how these decisions are backed by quantitative and qualitative considerations.
Q4. K&C Ltd. is working on a budget for the current year. The following information is linked to budget preparation:
Budgeted selling price per unit = SAR 450 per unit
Total fixed costs = SAR 275,000
Variable costs = SAR 150 per unit
Required:
You are required to prepare a flexible budget for 1,000, 1,500, 2,000, and 2,500 units.
