Q 1 In your opinion, how analyzing cost behaviour is useful?
Discuss why contribution margin and break-even can be used bymanagers?
Answer the two questions using graphs in your analysis.
Q 2 Taher Compagny sells product Afor $70 each. The estimated income statement for 2017 was asfollowing:
Sales $4,970,000
Variablecosts (2,000,000)
ContributionMargin 2,970,000
Fixedcosts (1,500,000)
Pretaxprofit $ 1,470,000
a. Compute the contribution margin per unit and thenumber of units that must be sold to break even.
b. Compute the contribution margin ratio and thebreakeven point in total revenue.
Q 3 Ibrahim Corporation producesand sells a product A with a price of $30 per unit and variablecosts of $12 per unit. Total fixed costs are $7,000.
a. Calculate Ibrahim Compagnyâs contribution marginper unit.
b. How many units must Ibrahim Compagny sell tobreak even?
c. You are manager inIbrahim Corporation. Explain what assumptions and limitations youshould consider when using CVP analysis?
Q 4 Abdulkarim Company is using job costing system. Theallocation base for overhead is number of machine hours. Thecompany uses normal costing to compute the overhead allocationrate.
The following data are available for 2017 year:
Estimated total overheadcost $270,000
Estimated total number ofmachine-hours 200,000
Actual total overhead cost $290,000
Actual total number of machine-hours 220,000
Job 630 used 14, 000 machine hours.
The company had job 630 and other jobs during the year.
a. Calculate the estimated overhead allocationrate.
b. Compute the overhead allocated to job 630.
c. Calculate total allocated overhead and analyzethe value of allocated overhead.
d. Explain the Concept of Job Costing?
Q 1 In your opinion, how analyzing cost behaviour is useful?
Discuss why contribution margin and break-even can be used bymanagers?
Answer the two questions using graphs in your analysis.
Q 2 Taher Compagny sells product Afor $70 each. The estimated income statement for 2017 was asfollowing:
Sales $4,970,000
Variablecosts (2,000,000)
ContributionMargin 2,970,000
Fixedcosts (1,500,000)
Pretaxprofit $ 1,470,000
a. Compute the contribution margin per unit and thenumber of units that must be sold to break even.
b. Compute the contribution margin ratio and thebreakeven point in total revenue.
Q 3 Ibrahim Corporation producesand sells a product A with a price of $30 per unit and variablecosts of $12 per unit. Total fixed costs are $7,000.
a. Calculate Ibrahim Compagnyâs contribution marginper unit.
b. How many units must Ibrahim Compagny sell tobreak even?
c. You are manager inIbrahim Corporation. Explain what assumptions and limitations youshould consider when using CVP analysis?
Q 4 Abdulkarim Company is using job costing system. Theallocation base for overhead is number of machine hours. Thecompany uses normal costing to compute the overhead allocationrate.
The following data are available for 2017 year:
Estimated total overheadcost $270,000
Estimated total number ofmachine-hours 200,000
Actual total overhead cost $290,000
Actual total number of machine-hours 220,000
Job 630 used 14, 000 machine hours.
The company had job 630 and other jobs during the year.
a. Calculate the estimated overhead allocationrate.
b. Compute the overhead allocated to job 630.
c. Calculate total allocated overhead and analyzethe value of allocated overhead.
d. Explain the Concept of Job Costing?
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