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Homework - 1 BCAC 423ATR

The document provides instructions for a homework assignment in Managerial Accounting. It includes 10 multiple choice and essay questions worth a total of 10 marks. The questions assess concepts related to cost accounting, the supply chain, and contribution margin analysis. Key details include classifying cost items into business functions, calculating contribution margin per unit, breakeven points, and margins of safety. The student is instructed to show work, answer all questions, and write their name and student ID clearly.

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60 views5 pages

Homework - 1 BCAC 423ATR

The document provides instructions for a homework assignment in Managerial Accounting. It includes 10 multiple choice and essay questions worth a total of 10 marks. The questions assess concepts related to cost accounting, the supply chain, and contribution margin analysis. Key details include classifying cost items into business functions, calculating contribution margin per unit, breakeven points, and margins of safety. The student is instructed to show work, answer all questions, and write their name and student ID clearly.

Uploaded by

g6cmqw8ctz
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Homework -1

Total Marks : 10

Course Title: Managerial Accounting Date : 22-3-1445


Course Code: BCAC 423 Time :
Section: 01 Duration :
CRN:
NAIF ABDULMONEM ALTAYYARI
Name : __________________________________ (USE CAPITAL LETTERS)
2141211
Student ID: ______________________________

PLEASE READ THE INSTRUCTIONS BEFORE YOU START TO ANSWER:


▪ Write your full Name and ID clearly in the given space.
▪ Number of exam pages (includes cover page): […] pages.
▪ Materials Allowed: [……………].
▪ Number of question parts: [……] (All are compulsory).
▪ Don’t write more than one answer for each question.
▪ Be sure to answer ALL questions.

CLOS AND GRADES DISTRIBUTION:

Questions CLOs Total Marks Student's Marks


1 2.2 5
2 2.4 5
Total 10

1
Question 1: 5 marks CLO 2.2
Part 1.1: True - False Statements (2.0 Marks)

1- Financial accounting information focuses on internal reporting. F


2- Cost accounting provides information for both management accounting and financial
accounting professionals.
T
3- Cost accounting measures and reports short-term, long-term, financial, and non financial
information.
T
4- The best-designed strategies are valuable, whether or not they are effectively implemented.
F
5- The supply chain refers to the sequence of business functions in which customer usefulness
is added to products or services. F
6- The supply chain always occurs within a single organization. F
7- The design of products, services, and processes component of the supply chain refers to the
detailed planning, engineering, and testing of products and processes.
T
8- The last step in the decision-making process is to make decisions by choosing among
alternatives. F
Part 1.2: Essay Question (3.0 Marks)

9-Classify each cost item into one of the business functions of the value chain, either (1)
R&D, (2) design, (3) production, (4) marketing, (5) distribution, or (6) customer service.

Item:
a. cost of samples mailed to promote sales of a new product
b. labor cost of workers in the manufacturing plant
c. bonus paid to a person with a 90% satisfaction rating in handling customers with
complaints
d. transportation costs for shipping products to retail outlets
Answer:
a. (4) marketing
b. (3) production
c. (6) customer service
d. (5) distribution

43) Classify each cost item of Ripon Printers given below into one of the business functions of the
value
chain, either (1) R&D, (2) design of products and processes, (3) production, (4) marketing (including
2
sales), (5) distribution, or (6) customer service.
10- Classify each cost item of Ripon Printers given below into one of the business functions of
the value chain, either (1) R&D, (2) design of products and processes, (3) production, (4)
marketing (including sales), (5) distribution, or (6) customer service.

Item:
a. cost of customer order forms
b. cost of paper used in manufacture of books
c. cost of paper used in packing cartons to ship books
d. cost of paper used in display at national trade show
e. depreciation of trucks used to transport books to college bookstores
f. cost of the wood used to manufacture paper
g. salary of the scientists attempting to find another source of printing ink
h. cost of designing the book size so that a standard-sized box is filled to capacity
Answer:
a. (4) marketing (including sales)
b. (3) production
c. (5) distribution
d. (4) marketing (including sales)
e. (5) distribution
f. (3) production
g. (1) research and development
h. (2) design of products and processes

Question 2: 5 marks CLO 2.4


Part 2.1: True - False Statements (2.0 Marks)
1. Contribution margin = Total revenues - Total manufacturing costs F
2. Contribution margin per unit equals contribution margin divided by number of units
sold. T
3. If planned net income is $30,000 and the tax rate Is 30%, then planned operating income
would bé $39,000. F
4. If a companyʹ's breakeven revenue Is $1,000 and its budgeted revenue Is $1,250, then its
margin of safety percentage Is 20%. T
5. A company with sales of $50,000, à contribution margin ratio of 30%, and fixed costs of
$10,000 Will earn a net income of $5000. F
3
6. If contribution margin decreases by $1 per unit, then operating profits will increase by
$1 per unit. F
7. When a company has the least fixed costs, the company is operating at a very high
operating leverage. F
8. If the sales mix shifts toward the lower-contribution-margin product, the breakeven
quantity will decrease. F
Part 2.2: Essay Question (3.0 Marks )

9- Furniture, Inc., sells lamps for $30. The unit variable cost per lamp is $22. Fixed costs total
$9,600.
Required:
a. What is the contribution margin per lamp?
b. What is the breakeven point in lamps?
c. How many lamps must be sold to earn a pretax income of $8,000?
d. What is the margin of safety, assuming 1,500 lamps are sold?
Answer:

a. Contribution margin per lamp = $30 - $22 = $8

b. N = Breakeven point in lamps


$30N - $22N - $9,600 = 0
$8N - $9,600 = 0
N = $9,600/$8 = 1,200 lamps

c. N = Target sales in lamps


$30N - $22N - $9,600 - $8,000 = 0
$8N- $17,600 = 0
N = $17,600/$8 = 2,200 lamps

d. Margin of safety = Sales - Breakeven sales


= ($30.00 × 1,500) - $36,000 = $9,000

4
2-) Craylon Manufacturing Company produces two products, X and Y. The following
information is presented for both products:
X Y
Selling price per unit $40 $25
Variable cost per unit 25 15

Total fixed costs are $275,000.

Required:
a. Calculate the contribution margin for each product.
b. Calculate breakeven point in units of both X and Y if the sales mix is 3 units of X for every
unit of Y.
c. Calculate breakeven volume in total dollars if the sales mix is 2 units of X for every 3 units
of Y.

Answer:

a. X: Contribution margin $40 − $25 = $15


Y: Contribution margin $25 − $15 = $10

b. Contribution margin (3 × $15) + (1 × $10) = $55


Breakeven point in units $275,000 / $55 = 5,000 units
X: 5,000 × 3 = 15,000 units
Y: 5,000 × 1 = 5,000 units

c. Contribution margin (2 × $15) + (3 × $10) = $60


Breakeven point in units $275,000 / $60 = 4,583.33 units
X: Dollar sales = 4,583.33 × 2 = 9,167 × $40 = $366,680 (rounded)
Y: Dollar sales = 4,583 × 3 = 13,750 × $25 = $343,750
Total dollar sales = $710,430

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