Questions:
Q1. DCT Corporation are in the manufacturing of soft drinks and produces three products X, Y and Z. During the year 2014, the joint costs of processing the three products were SAR 450,000. The following are the information related with production and sales value:
Product Units Sales Value at Split-Off Separable Costs Selling Price
X 675,000 SAR 25 per unit SAR 11.00 per unit SAR 75 per unit
Y 525,000 SAR 21 per unit SAR 7.00 per unit SAR 68 per unit
Z 300,000 SAR 17 per unit SAR 7.00 per unit SAR 52 per unit
X 675,000 SAR 25 per unit SAR 11.00 per unit SAR 75 per unit
Y 525,000 SAR 21 per unit SAR 7.00 per unit SAR 68 per unit
Z 300,000 SAR 17 per unit SAR 7.00 per unit SAR 52 per unit
Allocate the joint costs to each product using the physical output method.
Q2. What are “Non-routine Operating Decisions?” Examine any one non-routine operating decision with suitable example and discuss what quantitative and qualitative factors should be considered in making such decision?
Q3. ABC Ltd. is preparing a budget for 2015. Following are the information related with budget preparation:
Budgeted selling price per unit = $150 per unit
Total fixed costs = $80,000
Variable costs = $50 per unit
Required:
Prepare flexible budget for 1,200, 1,400, 1,600 and 1,800 units.
Q4. Explain with suitable examples why the support department costs are allocated to operating department? Briefly explain any one method of such allocation with numerical examples.
Budgeted selling price per unit = $150 per unit
Total fixed costs = $80,000
Variable costs = $50 per unit
Required:
Prepare flexible budget for 1,200, 1,400, 1,600 and 1,800 units.
Q4. Explain with suitable examples why the support department costs are allocated to operating department? Briefly explain any one method of such allocation with numerical examples.
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