How quantitative and qualitative considerations support

Assignment Help Accounting Basics

Reference no: EM133818535

Assignment: Accounting

I. What is the process of identifying activities in an organisation and assigning costs under the Activity Based Costing (ABC) system? Elucidate. You will need to include the right numerical examples to support your answer.

PPLC Company has two support departments, SD1 and SD2, and two operating departments, OD1 and OD2. The company decided to use the direct method and allocate variable SD1 dept. costs based on the number of transactions and fixed SD1 dept. costs based on the number of employees. SD2 dept. variable costs will be allocated based on the number of service requests, and fixed costs will be allocated based on the number of computers. The following information is provided

	Support Departments		Operating Departments
	SD1	SD2	OD1	OD2
Total Department variable costs	18,000	19,000	51,000	35,000
Total department fixed costs	20,000	24,000	56,000	30,000
Number of transactions	30	40	200	100
Number of employees	14	18	35	30
Number of service requests	28	18	35	25
Number of computers	15	20	24	28

You are required to allocate variable and fixed costs using direct method.

II. What are an organization's "outsourcing decisions" and "constrained resource decisions?" Provide a suitable numerical example of these decisions and explain how quantitative and qualitative considerations support a company's decision-making process.

III. VBN plastic industry makes three plastic toys: T1, T2, and T3. The joint costs of the three products in 2017 were SAR 120,000. The total number of units for each product and the selling price per unit is given below:

Product	Units	Selling Price per unit
T1	45,000	SAR 15
T2	26,000	SAR 14
T3	18,000	SAR 10

You are required to allocate the joint costs to each product using the physical volume method and sales value at the split-off method.

V. MN&M Corporation is preparing a budget for 2018. The company provides you with the following details which will help you to prepare the budget:

Budgeted selling price per unit = SAR 500 per unit
Total fixed costs = SAR 150,000
Variable costs = SAR 100 per unit

Required:

You are required to prepare a flexible budget for 1,000, 1,100, 1,200 and 1,300 units.

Reference no: EM133818535

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