Reference no: EM13845354

1. Calculate B.E.P. from the following Information:

(a) Sales $ 100,000, Variable Cost $, 50,000, Profit $, 20,000

(b) Fixed Cost $= 40,000, P/V Ratio 20%.

2. Explain Non-routine Operating Decisions

3. Abdullah Motors manufactures cars and currently uses only 50% of its manufacturing facility (20,000 cars). The company could utilize more of its facility by producing its own tires. It currently purchases tires at $30 per set of four. Abdullah would incur $12 per set for direct materials, $10 for direct labor, and $24 for overhead (which is 30% variable) if it produces the tires.

a. Should Abdullah Motors make or buy the tires? Provide calculations that support your answer.

b. Suppose Abdullah Motors could rent the unused portion of its plant and receive $1,500 a month. Should the company make or buy the tires? Provide calculations that support your answer

c. List two qualitative factors that could affect this decision.

4. Prepare Journal Entries from the following information relating to Job Costing.

a) The material storeroom receives a shipment of direct and indirect materials that cost $ 12,000.

b) Materials are sent to the stamping and assembly areas. The Cost of the direct materials is $ 1,500 and the cost of the indirect materials is $ 900.

c) Wages totalling $ 2,000 are accrued; 80 % of these costs are direct labour and 20% are indirect labour.

d) Overhead costs are allocated to work in process using an allocation rate of 150% of direct labour costs.

e) Job No. 1205, with a total cost of $ 2,500 is completed.

f) Job No. 1205 is shipped to the customer, who is billed for $ 5,000.

5. Explain the terms Spoilage, Normal and abnormal spoilage, reworked units and Scrap and the affect of spoilage in job costing