The document contains the answers to four accounting questions: 1) Calculating the breakeven point, degree of operating leverage, and margin of safety for a manufacturing company. 2) Using the high-low method to determine the variable cost per unit, fixed costs, and cost function from production data. 3) Making journal entries to record various manufacturing transactions including receiving materials, allocating overhead, and job completion. 4) Differentiating between relevant and irrelevant information for decision-making, with examples.

1. Assignment Question(s):(Marks 15) Q1. What Assignment
Question(s):(Marks 15)
Assignment Question(s):(Marks 15)Q1. What Assignment Question(s):(Marks 15)Q1. What
information is relevant for decision-making? Differentiate between relevant and irrelevant
information for decision-making. Support your answer by explaining the information in the
context of an organization.(3 Marks)Note: Your answer must include suitable examples of
relevant and irrelevant information for decision-making. (Week 2, Chapter 1)Answer:Q2.
A&D Ltd. is in the manufacturing of wooden products and makes several wooden items. The
following values are related to a particular wooden item:ParticularsSelling price per
unitSAR 1,100Variable cost per unitSAR 400Total fixed costsSAR 500,000Estimated next
year’s budgeted sales1,200 unitsYou are required to calculate:(4 Marks)BEP in units and
BEP in sales SARDegree of operating leverageMargin of safety in unitsMargin of safety in
SAR (Week 4, Chapter 3)Answer:a)= 500,000 / (1,100 – 400) = 714.29Variable cost per unit
(V) = 400Selling price per unit (P) = 1,100= 500,000 / [(1,100 – 400) / 1,100] =
785,714.29b)First, compute contribution margin and profit at 1,200 units:Contribution
margin = (1,100 – 400) x 1,200 = 840,000Profit = 840,000 – 500,000 = 340,000Degree of
operating leverage:= Contribution margin / Profit = 840,000 / 340,000 = 2.47c)Margin of
safety in units = Actual or estimated units of activity – BEP in units = 1,200 – 714.29 =
485.71d)Margin of safety in revenues = Actual or estimated sales SAR – BEP in sales SAR =
(1,100 * 1,200) – 785,714.29 = 1,320,000 – 785,714.29 = 534,285.71Q3. The information
below was derived from the 2018 records of HCS Company:(4 Marks)MonthUnits
ProducedTotal Cost
(SAR)May4,35044,200June4,70044,700July5,00045,000August5,40045,400September5,65
047,500October5,90057,150November3,45040,000December4,10040,600Using the high-
low method of analysis, calculateVariable costFixed cost, andDetermine a cost function.
(Week 3, Chapter 2)Answer:Use the high – low method to determine a cost function:The
highest level took place in on October (number of units produced 5,900; total cost
57,150)But the lowest activity occurred on November (number of units 3,450; cost
40,000)Use the data for November and October: –VC per unit = difference between two
costs / difference between two number of units produced= (57,150 – 40,000) / (5,900 –
3,450) = 17,150 / 2,450 = 7Use the data for November: –TC = FC + VC (VC = VC per unit *
number of units produced)40,000 = FC + 7 * 3,450FC = 40,000 – 24,150 = 15,850TC =
15,850 + 7 * Q (cost function)Q4. The following transactions are related to a particular job.

2. You are required to make the necessary journal entries.(4 Marks)The materials storeroom
receives a shipment of direct and indirect materials that cost SAR 50,000.Materials are sent
to the stamping and assembly areas.The cost of the direct materials is SAR 5,600 and the
cost of the indirect materials is SAR 3,200.Wages totaling SAR 7,000 are accrued; 60% of
these costs are direct labor and 40% are indirect labor.Overhead costs are allocated to work
in process using an allocation rate of 250% of direct labor costs.Job no. 25, with a total cost
of SAR 8,500 is completed.Job no. 25 is shipped to the customer, who is billed for SAR
15,000.(Week 5, Chapter 5)Answer:AccountsDRCRRaw materials inventory50,000Accounts
payable12,000(Receiving materials that cost SAR 50,000)AccountsDRCRWork in process
inventory5,600Overhead cost control3,200Raw materials inventory8,800(Materials sent to
stamping and assembly direct materials costs is SAR 5,600 and indirect materials is SAR
3,200.)AccountsDRCRWork in process inventory4,200Overhead cost control2,800Wages
Payable7,000(Wages totaling SAR 7,000 are accrued; 60 % of these costs are direct labor
and 40% are indirect labor)AccountsDRCRWork in process inventory17,500Overhead cost
control17,500(Overhead costs are allocated to work in process using an allocation rate of
250% of direct labor costs)AccountsDRCRFinished goods inventory8,500Work in process
inventory8,500(Job with a total cost of SAR 8,500 is completed)d)AccountsDRCRAccounts
receivable15,000Cost of goods sold8,5008,500Sales15,000Finished goods
inventory8,500(Job is shipped to the customer who is billed for SAR 15,000)information is
relevant for decision-making? Differentiate between relevant and irrelevant information for
decision-making. Support your answer by explaining the information in the context of an
organization.(3 Marks)Note: Your answer must include suitable examples of relevant and
irrelevant information for decision-making. (Week 2, Chapter 1)Answer:Q2. A&D Ltd. is in
the manufacturing of wooden products and makes several wooden items. The following
values are related to a particular wooden item:ParticularsSelling price per unitSAR
1,100Variable cost per unitSAR 400Total fixed costsSAR 500,000Estimated next year’s
budgeted sales1,200 unitsYou are required to calculate:(4 Marks)BEP in units and BEP in
sales SARDegree of operating leverageMargin of safety in unitsMargin of safety in SAR
(Week 4, Chapter 3)Answer:a)= 500,000 / (1,100 – 400) = 714.29Variable cost per unit (V)
= 400Selling price per unit (P) = 1,100= 500,000 / [(1,100 – 400) / 1,100] =
785,714.29b)First, compute contribution margin and profit at 1,200 units:Contribution
margin = (1,100 – 400) x 1,200 = 840,000Profit = 840,000 – 500,000 = 340,000Degree of
operating leverage:= Contribution margin / Profit = 840,000 / 340,000 = 2.47c)Margin of
safety in units = Actual or estimated units of activity – BEP in units = 1,200 – 714.29 =
485.71d)Margin of safety in revenues = Actual or estimated sales SAR – BEP in sales SAR =
(1,100 * 1,200) – 785,714.29 = 1,320,000 – 785,714.29 = 534,285.71Q3. The information
below was derived from the 2018 records of HCS Company:(4 Marks)MonthUnits
ProducedTotal Cost
(SAR)May4,35044,200June4,70044,700July5,00045,000August5,40045,400September5,65
047,500October5,90057,150November3,45040,000December4,10040,600Using the high-
low method of analysis, calculateVariable costFixed cost, andDetermine a cost function.
(Week 3, Chapter 2)Answer:Use the high – low method to determine a cost function:The
highest level took place in on October (number of units produced 5,900; total cost

3. 57,150)But the lowest activity occurred on November (number of units 3,450; cost
40,000)Use the data for November and October: –VC per unit = difference between two
costs / difference between two number of units produced= (57,150 – 40,000) / (5,900 –
3,450) = 17,150 / 2,450 = 7Use the data for November: –TC = FC + VC (VC = VC per unit *
number of units produced)40,000 = FC + 7 * 3,450FC = 40,000 – 24,150 = 15,850TC =
15,850 + 7 * Q (cost function)Q4. The following transactions are related to a particular job.
You are required to make the necessary journal entries.(4 Marks)The materials storeroom
receives a shipment of direct and indirect materials that cost SAR 50,000.Materials are sent
to the stamping and assembly areas.The cost of the direct materials is SAR 5,600 and the
cost of the indirect materials is SAR 3,200.Wages totaling SAR 7,000 are accrued; 60% of
these costs are direct labor and 40% are indirect labor.Overhead costs are allocated to work
in process using an allocation rate of 250% of direct labor costs.Job no. 25, with a total cost
of SAR 8,500 is completed.Job no. 25 is shipped to the customer, who is billed for SAR
15,000.(Week 5, Chapter 5)Answer:AccountsDRCRRaw materials inventory50,000Accounts
payable12,000(Receiving materials that cost SAR 50,000)AccountsDRCRWork in process
inventory5,600Overhead cost control3,200Raw materials inventory8,800(Materials sent to
stamping and assembly direct materials costs is SAR 5,600 and indirect materials is SAR
3,200.)AccountsDRCRWork in process inventory4,200Overhead cost control2,800Wages
Payable7,000(Wages totaling SAR 7,000 are accrued; 60 % of these costs are direct labor
and 40% are indirect labor)AccountsDRCRWork in process inventory17,500Overhead cost
control17,500(Overhead costs are allocated to work in process using an allocation rate of
250% of direct labor costs)AccountsDRCRFinished goods inventory8,500Work in process
inventory8,500(Job with a total cost of SAR 8,500 is completed)d)AccountsDRCRAccounts
receivable15,000Cost of goods sold8,5008,500Sales15,000Finished goods
inventory8,500(Job is shipped to the customer who is billed for SAR 15,000)