cost Acct

1. You are required to prepare a Direct Material Budget for the second quarter (April to June) by considering a manufacturing company operating in Saudi Arabia as a sample study. (4 Points)

SAWACO water desalination company Produce Desalination Water. The company expects to produce 2,535,000 two-liter bottles of Water in 2019. SAWACO purchases empty glass bottles from an outside vendor. Its target ending inventory of such bottles is 77,000; its beginning inventory is 54,000. The Cost accounting department make the following direct material purchase budget for bottles used in the plant.

Direct materials purchases budget.

Direct materials to be used in production (bottles) 2,535,000

Add target ending direct materials inventory (bottles) 77,000

Total requirements (bottles) 2,612,000

Deduct beginning direct materials inventory (bottles) 54,000

Direct materials to be purchased (bottles) 2,558,000

2. You are required to prepare the Sales price variance and Revenue sales quantity variance by taking any of your choice Saudi based company and suggest the suitable reasons for the variances. (3 Points)

Answer:

Playground Steel Factory is a leading manufacturer and supplier of Restaurant Seating, Tables & Other related Furniture, Indoor & Outdoor Playgrounds for Restaurants, Public & Private Parks, Public Houses, Hospitals, Schools and Furniture Seating for Shopping Centers, Sun Shades & Car Shades in the whole Kingdom of Saudi Arabia and Middle East Countries.

The Factory expected to sell 50,000 units from one of its products "Hospital seats" during 2018, the following is the planned sales and variable costs for 2018.

Sales (50,000 units) SR 3,000,000

Variable costs 1,750,000

During the year, a competitor came out with a similar hospital seats at a lower price. Management reacted by dropping its selling price for the hospital seat, but the actual sales dropped to 45,000 units at 55 SR per seat.

The cost accounting department prepare the sales price variance and revenue sales quantity variance.

3. You are required to allocate the support department cost to operations department by taking any Saudi based operating company. (3 Points)

Answer:

Safwan company has two service departments (personal and Financial) that provide services for one another as well as for two production departments, assembly and finishing. Data for the month are follows:

Personnel department costs were $86,000, and financial department costs were $41,000. Safwan uses employees as the allocation base for personnel department costs and payroll costs for financial department costs.

The accounting department allocate the support department cost to production department using the direct method as follows: