Saudi Electronic University Accounting Questions


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Assignment (3)
• The Assignment must be submitted on Blackboard (WORD format only) via allocated
• 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
• 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.
Assignment Question(s):
(Marks 10)
Q 1 K. Corporation Use Part A43 in one of products. The company’s Accounting
Department reports the following costs of producing the 12,000 units of the part that are
needed every year.
Per Unit
Direct Materials
$ 4.50
Direct Labor
$ 1.20
Variable Overhead
$ 2.70
Supervisor’s Salary
$ 3.00
Depreciation of Special Equipment
$ 2.30
Allocated General Overhead
$ 1.80
An outside supplier has offered to make the part and sell it to the company for $14.70 each.
If this offer is accepted, the supervisor’s salary and all of the variable costs, including
direct labor, can be avoided. The special equipment used to make the part was purchased
many years ago and has no salvage value or other use. The allocated general overhead
represents fixed costs of the entire company. If the outside supplier’s offer were accepted,
only $5,000 of these allocated general overhead costs will be bear.
a. Prepare a report that shows the effect on the company’s total net operating income of
buying part A43 from the supplier rather than continuing to make it inside the company.
b. Which alternative should the company choose?
(3 Marks)
Q2. Define in Your words
a. Cost Centre
b. Profit Centre
c. Investment Centre
(2 Marks)
Q.3 KK Industries is a division of a major corporation. Last year the division had total
sales of $23,380,000, net operating income of $2,828,980, and average operating assets of
$7,000,000. The company’s minimum required rate of return is 12%.
a. What is the division’s margin?
b. What is the division’s turnover?
c. What is the division’s return on investment (ROI)? (2 Marks )
Q 4. The following standards have been established for a raw material used in the production of
product 44:
Standard quantity of the material per unit of output …
2.6 pounds
Standard price of the material ……………………………………
$14.50 per pound
The following data pertain to a recent month’s operations:
Actual material purchased ………………..
7,600 Pounds
Actual cost of material purchased …….
Actual material used in production ….
7,300 Pounds
Actual output…………………………………….
2,800 units of product O99
a. What is the materials price variance for the month?
b. What is the materials quantity variance for the month?
(3 Marks )

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