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Q1. State the reasons for allocating support department costs to the operating department.
What are its various methods? Provide numerical examples of any two methods and discuss
how these methods could be used to allocate these costs?
8, 2.5 Marks)
Q2. Z&C has two support departments, A1 and A2, and two operating departments, B1 and
B2. Z&C has decided to use the direct method and allocate variable A1 dept. costs based on
the number of transactions and fixed A1 dept. costs based on the number of employees. A2
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 information is provided:
(CH 8, 2.5 Marks)
Total Department variable costs
Total department fixed costs
Number of transactions
Number of employees
Number of service requests
Number of computers
Allocate variable and fixed costs.
Q3. JTC Corporation is a metal product manufacturer that produces three products: A, B,
and C. The joint costs of the three products in 2018 were SAR 50,000. The total number of
units for each product and the selling price per unit are given below:
9, 2.5 Marks)
Selling Price per unit
Using the physical volume method and sales value at the split-off method, allocate the joint costs
to each product.
Q4. ABC Ltd. is preparing a budget for 2018. Following are the information related to
10, 2.5 Marks)
Budgeted selling price per unit
SAR 200 per unit
Total fixed costs
SAR 65 per unit
Prepare flexible budget for 2,000, 2,500, 3,000 and 3,500 units.
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