cost of accounting

Assignment 3

Deadline: 19.07.2021@ 23:59

For Instructor’s Use only

Instructions – 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.

1. Provide numerical examples of a Direct Material Budget for the second quarter (April to June) by considering a manufacturing company operating in Saudi Arabia as a sample study. (2marks)

Answer:-

Almarai, makes a juice that sells for SAR 68/unit. It expects to produce 5,000 units in April and 6,000 units in May and 7,000 unit in June. Almarai prefers to end each period with a direct materials inventory equal to 30% of the direct materials required for the next period’s production.

Almarai’s product uses 0.2 pounds of direct material per unit, at a cost of SAR 5/lb. There were 500 lbs. of direct material on hand on April 1. Assume that budgeted production for July is 8,000 units.

The direct materials purchases and usage budget for the second quarter (April to June)

Notes:-

· Beginning DM inventory of the month is desired ending DM inventory of last period.

· Desired ending DM inventory of June = Required production in units of July * 0.2 * 30% = 8,000 * 0.2 * 30% = 480

· Usage budget = Total DM required, in pounds * Budgeted DM cost per pound

2. XYZ Industries Co. decided to allocate Human Resource department costs based on the number of employees in each department and Information Technology costs based on the number of machine hours in each department. (2marks)

Required:

a) Give a numerical example for the four departments, given the table below, (the numerical information should be appropriate as per the table given as a reference.

Answer:-

b) Then based on your given information, use The Direct method to allocate support department costs.

Allocate cost:

Answer:-