ACCT 322 SEU Managerial Accounting Allocations and Overhead Exercises

College of Administration and Finance SciencesAssignment (1)
Deadline: Saturday 7/10/2023 @ 23:59
Course Name: Managerial Accounting
Student’s Name:
Course Code: ACCT 322
Student’s ID Number:
Semester: 1st
CRN:
Academic Year: 1445 H
For Instructor’s Use only
Instructor’s Name:
Students’ Grade:
/15
Level of Marks: High/Middle/Low
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 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.
• Submissions without this cover page will NOT be accepted.
College of Administration and Finance Sciences
Assignment Question(s):
(Marks 15)
Q1. List the two types of fixed costs and give example
)2 Points)
Q2. Present and explain the equation of the total mixed cost line.
(2 Points)
Q3. Why use an allocation base?
(3 Points)
Q4. The following information summarizes the company’s cost structure:
( 4 points)
Variable cost per unit ………SAR1.3
Fixed cost per unit ………….SAR4.5
Total cost per unit …………..SAR 5.8
Units produced and sold … SAR48,000
Required:
Estimate the following costs at the 40,000 unit level of activity:
a. Total variable cost.
b. Total fixed cost.
c. Variable cost per unit.
d. Fixed cost per unit.
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Q5. ABC Corporation manufactures two products, Product M and Product N. Product N is of fairly
recent origin, having been developed as an attempt to enter a market closely related to that of Product
N. Product N is the more complex of the two products, requiring one hour of direct labor time per
unit to manufacture compared to one-half hour of direct labor time for Product M. Product N is
produced on an automated production line.
Overhead is currently assigned to the products on the basis of direct labor-hours. The company
estimated it would incur SAR 500,000 in manufacturing overhead costs and produce 10,000 units of
Product N and 60,000 units of Product M during the current year. Unit cost for materials and direct
labor are:
Direct material……
Direct labor
Product M
SAR 10
SAR 8
Product N
SAR 24
SAR 12
Required:
a. Compute the predetermined overhead rate under the current method of allocation and determine
the unit product cost of each product for the current year.
b. The company’s overhead costs can be attributed to four major activities. These activities and the
amount of overhead cost attributable to each for the current year are given below:
Estimated
Overhead
Costs
Activity cost Pools
Machine setups required …..
Purchase orders issued……..
Machine-hours required ……
Maintenance requests issued…
Expected Activity
Product M Product N
SAR 200,000
800
43,500
500
104,000 3,000
152,500
860
SAR 500,000
1,200
100
10,000
1,140
Total
2,000
600
13,000
2,000
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Using the data above and an activity-based costing approach, determine the unit product cost of each
product for the current year.
(4 Points)