ACCT 322 SEU Variable and Absorption Costing Discussion
Description
Assignment (2)
Deadline: Saturday 30/07/2022 @ 23:59
Instructions – PLEASE READ THEM CAREFULLY
• 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.
• 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 answers must be typed using Times New Roman (size 12, double-spaced) font.
No pictures containing text will be accepted and will be considered plagiarism.
Assignment Question(s):
(Marks 10)
Q 1. What do you mean by Variable and Absorption Costing? Explain both with suitable example.
[2 marks]
Answer:
Q2. Hamed Company is preparing budgets for the quarter ending June 30, 2019.
Budgeted sales in units for the next five months are:
April
May
June
July
20,000
50,000
30,000
25,000
Required:
a. Prepare Sales budget for April, May & June assuming selling price per unit is SR 15.
[2 marks]
1
b. Prepare production budget for April, May & June if the company wishes ending inventory as
10 % of next month sales units.
[2 marks]
Answer:
Q3. Ayob Company’s projected profit for the coming year is as follows:
Sales SAR 200,000 with Price per unit SAR 20, Total Variable cost SAR 120,000 with Variable cost
per unit SAR 12 and fixed expenses are SAR 64,000
a. Compute the break-even point in units.
[1 mark]
b.How many units must be sold to earn a profit of SAR 30,000?
[1 mark]
Q4. Ismail Company sells several products. Information of Revenues and Costs are as follows:
Selling price per unit
SAR20
Variable cost per unit is including:
Direct materials per unit
SAR4
Direct manufacturing labor per unit
SAR1
Variable Manufacturing cost per unit SAR1
Variable Selling costs per unit
Total annual fixed costs
SAR2
SAR96, 000
a. Calculate the contribution margin per unit
[0.5 mark]
b. Calculate the Contribution Margin Ratio.
[0.5 mark]
c. Calculate the breakeven point in total sales dollars a
[1 mark]
2
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