Information relevant for decision-making
Information relevant for decision-making
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:
| Particulars | |
| Selling price per unit | SAR 1,100 |
| Variable cost per unit | SAR 400 |
| Total fixed costs | SAR 500,000 |
| Estimated next year’s budgeted sales | 1,200 units |
You are required to calculate: (4 Marks)
- BEP in units and BEP in sales SAR
- Degree of operating leverage
- Margin of safety in units
- Margin of safety in SAR (Week 4, Chapter 3)
Answer:
Q3. The information below was derived from the 2018 records of HCS Company: (4 Marks)
| Month | Units Produced | Total Cost (SAR) |
| May | 4,350 | 44,200 |
| June | 4,700 | 44,700 |
| July | 5,000 | 45,000 |
| August | 5,400 | 45,400 |
| September | 5,650 | 47,500 |
| October | 5,900 | 57,150 |
| November | 3,450 | 40,000 |
| December | 4,100 | 40,600 |
Using the high-low method of analysis, calculate
- Variable cost
- Fixed cost, and
- Determine a cost function. (Week 3, Chapter 2)
Answer:
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: