Information relevant for decision-making

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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 unitSAR  1,100
Variable cost per unitSAR  400
Total fixed costsSAR  500,000
Estimated next year’s budgeted sales1,200 units

 You are required to calculate:                                                                                                  (4 Marks)

  1. BEP in units and BEP in sales SAR
  2. Degree of operating leverage
  3. Margin of safety in units
  4. 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 ProducedTotal Cost (SAR)
May4,35044,200
June4,70044,700
July5,00045,000
August5,40045,400
September5,65047,500
October5,90057,150
November3,45040,000
December4,10040,600

Using the high-low method of analysis, calculate

  1. Variable cost
  2. 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)

  1. The materials storeroom receives a shipment of direct and indirect materials that cost SAR 50,000.
  2. 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.
  3. Wages totaling SAR 7,000 are accrued; 60% of these costs are direct labor and 40% are indirect labor.
  4. Overhead costs are allocated to work in process using an allocation rate of 250% of direct labor costs.
  5. Job no. 25, with a total cost of SAR 8,500 is completed.
  6. Job no. 25 is shipped to the customer, who is billed for SAR 15,000.

                                                                                                                                  (Week 5, Chapter 5)

Answer:

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