ACCT 301 Saudi Electronic Assignment 3 Cost accounting Questions

Question: 1-(3 points)

If you have these 2 constraints:

0.6R+4D £ 180,000 Machine Hour constraint

3R+5D £ 150,000 Direct Labor Hour constraint


a Draw a graph showing the possible production plans for this company.

b- From your opinion where is the feasible area of the production plan. Explain your answer.

Question no 2

A housekeeping support department budgets its costs at SR 40,000 per month plus SR 12 / hour. For January the following were the estimated and actual hours provided by the housekeeping support department to 3 operating department.

Estimated hours spent cleaning

Actualhours spent cleaning

Department A



Department B



Department C







A-What is the support department’s allocation rate if estimated activity is the allocation base?

B What is the support department’s allocation rate if actual activity is the allocation base?

CList one advantages and one disadvantage for each types of allocation rate. (3 points)

3- Al Yamamah Steel Industries Co. uses the step method for allocating the costs of its service departments to operating departments. The company has two support departments (Human Resource and Information Technology) and two operating departments (Hot Rolled Hollow Steel and Cold Rolled Hollow Steel).

Al Yamamah Steel Industries Co. decided to allocate Human Resource department costs based on the number of employees in each department and Information Technology costs based on the number of machine hours in each department. (4 Points).


a- Give a numerical example for the four departments as a given information.

Support Departments

Operating Departments


Human Resource

Information Technology

Hot Rolled Hollow Steel

cold Rolled Hollow Steel

Total department cost

Number of employees

Number of machine hours

b- Then based on your given information, use the step-down method to allocate support department costs.

Allocate cost:

Human Resource

Information Technology


Q1. Explain the gross and net methods of recording receivables. (2 marks)

Q2. What are the systems for maintaining inventory Records. (2 marks)

Q3. Ramirez Company exchanged equipment used in its manufacturing operations plus $6,000 in cash for similar equipment used in the operations of Kennedy Company. The following information pertains to the exchange.

Ramirez CoKennedy Co

Equipment (cost) 84,000$84,000

Accumulated depreciation57,00030,000

Fair value of equipment40,50046,500

Cash given up6,000


Prepare the journal entries to record the exchange on the books of both companies. Assume that exchange lacks commercial substance. (4 marks)

Q4. The Rock Shop shows the following data related to an item of inventory:


January 1100
units @ $5.00

Purchase, January 9200 units @ $5.40

Purchase, January 19100 units @ $6.00

Inventory, January 31200 units

(a)What value should be assigned to the ending inventory using FIFO? (1 mark)

(b)What value should be assigned to cost of goods sold using Average Cost? ( 1 mark)

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