Cost Accounting / 301

• The Assignment must be submitted on Blackboard (WORD format only) via allocated
  folder.
• Assignments submitted through email will not be accepted.
• Students are advised to make their work clear and well presented, marks may be
  reduced for poor presentation. This includes filling your information on the cover
  page.
• Students must mention question number clearly in their answer.
• Late submission will NOT be accepted.
• Avoid plagiarism, the work should be in your own words, copying from students or
  other resources without proper referencing will result in ZERO marks. No exceptions.
• All answers must be typed using Times New Roman (size 12, double-spaced) font.
  No pictures containing text will be accepted and will be considered plagiarism.
• Submissions without this cover page will NOT be accepted.

For Instructor’s Use only

Instructor’s Name:
Students’ Grade: /15

College of Administration and Finance Sciences

Assignment Question(s): (Marks 15)

Q1. Discuss with suitable examples why activity-based costing (ABC) is better than the
traditional costing system. Provide a suitable numerical example of ABC in the manufacturing
sector and show all the necessary calculations required under the ABC system.

(3 Marks)

Note: Your answer must include suitable numerical examples showing all the calculations of the
ABC system. You are required to assume values of numerical examples of your own and they should
not be copied from any sources. (Chapter 7)

Answer:

Q2. “A non-routine decision is one that is taken in response to a non-repetitive, operational
scenario.” Comment on this statement and explain with suitable examples the various types of
non-routine operating decisions that a company makes under such a scenario. Support your
answer with numerical examples along with qualitative considerations involved in making such
decisions. (4 Marks)

Note: Your answer must include suitable numerical examples for various types of non-routine
operating decisions. You are required to assume values of numerical examples of your own and they
should not be copied from any sources. (Chapter 4)

Answer:

College of Administration and Finance Sciences

Q3. ADLG Company has two support departments, SS1 and SS2, and two operating
departments, OD1 and OD2. The company has decided to use the direct method and allocate
variable SS1 dept. costs based on the number of transactions and fixed SS1 dept. costs based on
the number of employees. SS2 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 values have been extracted for the allocation:

Support Departments

(4 Marks)

Operating Departments

SS1

Total Department variable costs 16,000
Total department fixed costs 19,500
Number of transactions 50
Number of employees 18
Number of service requests 37
Number of computers 20

SS2

19,000
34,000
55
24
22
25

OD1

105,000
120,000
250
47
26
31

OD2

68,000
55,000
140
38
32
37

(Chapter 8)

You are required to allocate variable and fixed costs.
Answer:

Q4. JKL Company processes a direct material and produces three products: P1, P2, and P3. The
joint costs of the three products in 2018 were SAR 120,000. The total number of units for each
product and the selling price per unit is given below: (4 Marks)

Product Units Selling Price per unit

P1 55,000 SAR 70

College of Administration and Finance Sciences

1. P2 34,500 SAR 58
2. P3 10,500 SAR 44

You are required to use the physical volume method and sales value at the split-off method to
allocate the joint costs to each product. (Chapter 9)
Answer: