Provide numerical examples of a Direct Material Budget for the second quarter (April to June) by considering a manufacturing company operating in Saudi Arabia as a sample study. (2marks)
XYZ Industries Co. decided to allocate Human Resource department costs based on the number of employees in each department and Information Technology costs based on the number of machine-hours in each department. (2marks)
Required:
Give a numerical example for the four departments, given the table below, (the numerical information should be appropriate as per the table given as a reference.
Support Departments Operating Departments TOTAL ( Human Resource, Information Technology) ( Hot Rolled Hollow Steel , cold Rolled Hollow Steel ) Total department cost Number of employees Number of machine hours b- Then based on your given information, use The Direct method to allocate support department costs. Allocate cost: Human Resource Information Technology TOTAL
For what types of products is the physical output method appropriate? Give suitable and real example that should support your answer. ch9 (1mark)
College of Administrative and Financial Sciences
Assignment 3
Deadline: 19.07.2021@ 23:59
Course Name: Cost accounting
Student’s Name:
Course Code: ACCT 301
Student’s ID Number:
Semester: summer term
CRN:
Academic Year:1442 H
For Instructor’s Use only
Instructor’s Name: Wadha Alrashidi
Students’ Grade: Marks Obtained/Out of
Level of Marks: High/Middle/Low
Instructions – PLEASE
READ THEM CAREFULLY
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1. Provide numerical examples of a Direct Material Budget for the second quarter (April to June) by considering a manufacturing company operating in Saudi Arabia as a sample study. (2marks)
Answer:-
Almarai, makes a juice that sells for SAR 68/unit. It expects to produce 5,000 units in April and 6,000 units in May and 7,000 unit in June. Almarai prefers to end each period with a direct materials inventory equal to 30% of the direct materials required for the next period’s production.
Almarai’s product uses 0.2 pounds of direct material per unit, at a cost of SAR 5/lb. There were 500 lbs. of direct material on hand on April 1. Assume that budgeted production for July is 8,000 units.
The direct materials purchases and usage budget for the second quarter (April to June)
Item
April
May
June
Total
Required production in units
5,000
6,000
7,000
18,000
* DM required per unit, in pounds
0.2
0.2
0.2
0.2
Total DM required, in pounds
1,000
1,200
1,400
3,600
Less: Beginning DM inventory
(500)
(360)
(420)
(1,280)
Plus: Desired ending DM inventory
360
420
480
1,260
Required DM purchases in pounds
860
1,260
1,460
3,580
* Budgeted DM cost per pound
5
5
5
5
Budgeted cost of DM
4,300
6,300
7,300
17,900
Usage budget
= 1,000 * 5 = 5,000
= 1,200 * 5 = 6,000
= 1,400 * 5 = 7,000
18,000
Notes:-
· Beginning DM inventory of the month is desired ending DM inventory of last period.
· Desired ending DM inventory of June = Required production in units of July * 0.2 * 30% = 8,000 * 0.2 * 30% = 480
·
· WORD format only) via allocated folder. will NOT be accepted.without this cover page will NOT be accepted.
1. Provide numerical examples of a Direct Material Budget for the second quarter (April to June) by considering a manufacturing company operating in Saudi Arabia as a sample study. (2marks)
Answer:-
Almarai, makes a juice that sells for SAR 68/unit. It expects to produce 5,000 units in April and 6,000 units in May and 7,000 unit in June. Almarai prefers to end each period with a direct materials inventory equal to 30% of the direct materials required for the next period’s production.
Almarai’s product uses 0.2 pounds of direct material per unit, at a cost of SAR 5/lb. There were 500 lbs. of direct material on hand on April 1. Assume that budgeted production for July is 8,000 units.
The direct materials purchases and usage budget for the second quarter (April to June)
Item
April
May
June
Total
Required production in units
5,000
6,000
7,000
18,000
* DM required per unit, in pounds
0.2
0.2
0.2
0.2
Total DM required, in pounds
1,000
1,200
1,400
3,600
Less: Beginning DM inventory
(500)
(360)
(420)
(1,280)
Plus: Desired ending DM inventory
360
420
480
1,260
Required DM purchases in pounds
860
1,260
1,460
3,580
* Budgeted DM cost per pound
5
5
5
5
Budgeted cost of DM
4,300
6,300
7,300
17,900
Usage budget
= 1,000 * 5 = 5,000
= 1,200 * 5 = 6,000
= 1,400 * 5 = 7,000
18,000
Notes:-
· Beginning DM inventory of the month is desired ending DM inventory of last period.
· Desired ending DM inventory of June = Required production in units of July * 0.2 * 30% = 8,000 * 0.2 * 30% = 480
· Usage budget = Total DM required, in pounds * Budgeted DM cost per pound
2. XYZ Industries Co. decided to allocate Human Resource department costs based on the number of employees in each department and Information Technology costs based on the number of machine hours in each department. (2marks)
Required:
a) Give a numerical example for the four departments, given the table below, (the numerical information should be appropriate as per the table given as a reference.
Answer:-
Support Departments
Operating Departments
TOTAL
Human Resource
Information Technology
Hot Rolled Hollow Steel
cold Rolled Hollow Steel
Total department cost
310,000
169,000
1,504,000
680,000
2,663,000
Number of employees
10
3
30
10
53
Number of machine hours
5
500
100
400
1,005
b) Then based on your given information, use The Direct method to allocate support department costs.
Allocate cost:
Answer:-
Human Resource
(310,000)
0
232,500
77,500
0
Information Technology
0
(169,000)
33,800
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