1: The accountant of Manama Corporation has collected the following data on its copy machine costs for the last six months of the year. Month Number of copies Total copy cost July 3,500 $14,000 August 3,200 13,500 September 4,100 16,000 October 5,100 18,000 November 5,600 18,500 December 4,800 17,500 Requirements: 1- Use the regression analysis method to: a- Estimate the cost function (Y= F+vX). b- What percentage of the copy cost depends on number of copies? What portion of the fluctuation is not explained by that cost driver? You need to perform this using Excel. Submit the excel sheet along with your paper. 2- Using the high-low method, calculate the total fixed factory overhead cost and the variable factory overhead cost per direct labour hour and Prepare the cost function. 3. What would the total factory copy cost be at a level of 4,600 copies using each method above? 4. Which prediction method is the best method? Why? Total: 6 Marks] [Total: 6 Marks] Q2: The following information was taken from the records of the CBA Company for the year ended December 31, 2020: Sales $220,000 Direct Materials purchased Finished goods, (December 1st) 59,000 23,000 Finished goods, December 31st) 15,000 Direct Materials (December 1") 18,000 Direct Materials (December 31st) 1,000 WIP (December 1") 30,000 WIP (December 31") 17,000 Costs: Sales salaries expense Direct labour 16,360 28,600 Advertising expense 5,200 Depreciation expense-office equipment 3,400 Depreciation expense-factory equipment 9,600 Heat, light, and power-factory 15,350 Indirect labour 22,300 Office salaries expense 18,620 Property taxes-factory 19,150 Property taxes-headquarters building 6,700 Rent expense-factory 26,000 Supplies-factory Miscellaneous costs-factory Required: 5,750 1,220 Page 2:05 PM 1- Insert each cost above in the below table, then classify each one as per the headings of this table (Each cost must be classified as variable or fixed, manufacturing or non-manufacturing, and direct or indirect cost) the first one is done for you Cost Variable or Fixed Direct labour Variable Manufacturing or Non-manufacturing Direct or Indirect costs Manufacturing Direct [2 Marks] 2- Prepare the statement of cost of goods manufactured. Explain the meaning of this item! [2Marks] 3- Prepare the income statement (including the calculation of the cost of goods sold). [2 marks] 4- Show how the inventory account would be presented in the company's balance sheet. [2 Mark] 5- Explain the difference between direct and indirect cost? [1 Marks] [Total: 9 Marks] Q3: [Total: 9 Marks] BCU is a leading producer of gaming PCs. The annual capacity of the company is 150,000 PCs. The company currently produces and sells 25,000 PCs per year, a quantity that has been constant over the past three years. Based on the budget, the accounting department has calculated the following unit costs for the PCs: Direct materials Direct labour Manufacturing overhead (fixed and variable) Selling and Admin (fixed and variable) Total unit cost $ 100 30 40 20 190 The company's budget includes $350,000 in fixed manufacturing overhead and $150,000 in fixed selling and administrative expenses. The PCs sell for $250 each. Required 1- Advanced PC, has approached BCU with an offer to buy 5,000 PCs during the coming year. Given the size of the order, Advanced PC has requested a 20% discount on BCU's normal selling price. Should BCU accepts this offer? 2- Are there any qualitative considerations that need to be addressed? Explain 3- Return to the original data. Major PC has just signed a contract with the government to replace all its PCs. Major PC needs 80,000 PCs to complete the job and has offered to buy them from BCU at a price of $100 per PC. Major PC will pick up the PCs at BCU's plant, so BCU 8:05 PM will not pay the $2 per PC shipping charge (included in the selling expenses). Should BCU accepts this offer? 04 [7 Marks] Q4: 17 Marks] KBB Company manufactures 12,000 units of part 101 for its production cycle. The costs per unit of part 101 are as follows: Direct materials Direct labor Variable factory overhead Fixed factory overhead Total costs $5 9 7 2 $23 Fun, Inc., has offered to sell 5,000 units of part101 to KBB for $20 per unit. If KBB accepts Fun offer, its freed-up facilities could be used to earn $6,000 in contribution margin by manufacturing part 202. In addition, KBB would eliminate 75% of the fixed overhead applied to part 101. Required: 1- What costs are relevant to this decision? Why? 2- Should KBB accepts Fun's offer? Why or why not? 3- What other factors should KBB consider before making the decision to outsource this part? Q5: [6 Marks] GYM Inc. produces exercise and fitness equipment. The company produces two products using machine XDC. The machines have a maximum capacity of 5,000 machine hours, and no other products that the company makes use this machine. Murad, the company's controller, has gathered the following information about the two products: Ellipticals Selling price/ unit Treadmill $500 Direct Materials 180 Direct labor 30 Variable overhead 10 Fixed overhead 15 Demand volume 1800 Machine hours per unit 1.5 Required: $350 120 20 7 13 3600 2.5 1- Calculate the total number of machine hours needed to produce enough units to meet the sales demand for the two products. 2.How should Murad allocate the 5,000 available machine hours between the two products so that GYM maximizes its profits? 8:05 PM 3.What total contribution margin will GYM realize based on your answer to part (2)? 4.Murad has talked with the marketing department about the situation and suggested that the company raise the sales price on the Ellipticals to $650 to reduce customer demand. The marketing department believes that at the higher price, demand for the Ellipticals will drop to 1,600 units. How should Murad allocate the 5,000 machine hours based on this new information? What total contribution margin will GYM earn? 5. After hearing about Murad's recommendation to increase the Elliptical price to $650, the sales manager, suggested that the company raise the price of the Treadmill instead. He believes that if the price is increased to $560, demand will fall to 1,400 units. How should Murad allocate the 5,000 machine hours under the sales manager's proposal? What total contribution margin will GYM earn? 6.Based on your answers to parts (3), (4), and (5), which action do you suggest that GYM take? Why? [12 Marks]