Assignment 1: Cost accounting
Q1. Every organisation faces risks of unethical or illegal behaviour of its employees that should be avoided. Suggest the measures that control such behaviours of the employees in an organisation.
Q2. Abdul Car Rental charges its customers SAR 26 per day plus SAR 0.20 per mile. Its competitor Ahmad rents cars for SAR 35 per day plus SAR 0.08 per mile.
How many miles you need to drive on a four day rental so that the cost of the two alternatives would be same?
Q3. Saad Company is developing a cost function for its production costs using the high-low method (Two-Point Method: high and low point). The following data have been collected for the year 2017:
Quarter Number of units Total cost of production
1 4,000 $690
2 5,900 883.8
3 7,800 1077.6
4 9,000 1,200
Calculate the following amounts:
a. The variable cost per unit
b. The fixed cost
c. The estimated total cost for 11,000 units.
d. The estimated total cost for 5,000 units.
Q4. Following are the results from two different simple regression analyses estimating the costs of the marketing departmentusing number of sales persons and number of units sold as cost drivers.
|
Variable
|
Coefficient
|
t-statistic
|
p-value
|
|
Intercept
|
500.75
|
4.05
|
0.03
|
|
Number of sales persons
|
20.50
|
6.10
|
0.004
|
|
Adjusted R-square = 0.80
|
|
|
Variable
|
Coefficient
|
t-statistic
|
p-value
|
|
Intercept
|
700.23
|
0.98
|
0.30
|
|
Number of units sold
|
120.33
|
3.66
|
0.05
|
|
Adjusted R-square = 0.49
|
|
a. Which independent variable explains more of the variation in marketing department costs?
b. Choose the most appropriate cost driver and write the cost function.
c. What are the examples of uncertainties that could affect the accuracy of the cost function in estimating the cost for the nextmonth.
Q5. Assume that you are working as Cost Accountant for Saudi Ceramic Company and it is estimating the fixed and variable costs. The following costs were incurred during the month of December 2017 by Saudi Ceramic Company when 330 products were manufactured. The Saudi Ceramic Company has the following cost. Wages for Labor: SAR 10,640, Raw Material & Supplies: SAR 3,960, Depreciation on Plant and Equipment: SAR 1,073, Plant Manager Salary: 2,310 and Office Rent: SAR 1,403.
Determine a cost function of Saudi Ceramic Company by describing all the steps of determination of the cost function in detail.