cost accounting 2 1

Q 1 Give a numerical example of non routine decision, Determine the relevant costs for this non routine decision and discuss the analysis (quantitative and qualitative) required to make the decision?

(1.5 Marks)

Q 2 Which types of companies would most likely use a process costing system? Provide examples of two Saudi Compagnies.

Explain the methods with which the cost per unit will be calculated for this type of companies. Explain how the different items of inventory will be evaluated?

(1.5 Marks)

Q 3 KLM Compagny has two departments, Assembly and Testing. You are given the following information about the costs of 5 activities that occur at the manufacturing plant monthly:

Activity Total Costs Total number of units of Cost Driver

Material handling SAR200, 000 400,000 parts

Supervision of direct labor 126,000 90 employees

Janitorial and cleaning 200,000 4,000 hours

Machining 300,000 7,000 machine hours

Total costs SAR826,000

The above activities are used by the two departments as follows:

Assembly Testing

Material handling 200,000 parts 200,000 parts

Supervision of direct labor 40 employees 50 employees

Time spent cleaning 2,000 hours 2,000 hours

Number of machine hours 5,000 machine hours 2,000 machine hours

a. How much of the material handling cost will be allocated to Assembly?

b. What is the ABC allocation rate for supervision of direct labor?

( 2 Marks)

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