Q 1 Give a numerical example of non routine decision, Determine the relevant costs for this non
routine decision and discuss the analysis (quantitative and qualitative) required to make the decision?
…………………………………………………………………………………………………………
Q 2 Which types of companies would most likely use a process costing system? Provide examples
of two Saudi Compagnies.
Explain the methods with which the cost per unit will be calculated for this type of companies.
Explain how the different items of inventory will be evaluated?
…………………………………………………………………………………………………………
Q 3 KLM Compagny has two departments, Assembly and Testing. You are given the following
information about the costs of 5 activities that occur at the manufacturing plant monthly:
Activity
Total Costs
Material handling
SAR200, 000
Supervision of direct labor
126,000
Janitorial and cleaning
200,000
Machining
300,000
Total costs
SAR826,000
Total number of units of Cost Driver
400,000 parts
90 employees
4,000 hours
7,000 machine hours
The above activities are used by the two departments as follows:
Assembly
Material handling
200,000 parts
Supervision of direct labor
40 employees
Time spent cleaning
2,000 hours
Number of machine hours
5,000 machine hours
Testing
200,000 parts
50 employees
2,000 hours
2,000 machine hours
a. How much of the material handling cost will be allocated to Assembly?
b. What is the ABC allocation rate for supervision of direct labor?
( 2 Marks)
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