Al Wathba Printing Services is a family business established in Oman in the year 2011 with an objective to provide world-class printing solutions of the corporate customers in Oman. The firm is experiencing a steady growth in the business over the past 9 years and is highly appreciated by all its customers. From the last five years, the firm is receiving majority of its orders from four major customers and is executing the orders ensuring quality and consistency. As the firm is established as a family business, they appointed one person as a financial accountant who records all the expenses and calculates the profit by deducting total expenses from total income. The owners of the firm are satisfied with this method as they were into profits since inception. However, the owners noticed that the quantum of profits started declining from the past two years and they believe that it is due to the increase in the expenses. In light of the current scenario, the firm appointed you as a cost accountant and you were asked to identify the reasons for the declining in the profits. The financial accountant provided the following data for the month of April 2020. Particulars Total Total income from the four Jobs 2250 Less : Direct Material Cost @ RO 20 per Kg (1320) Direct Labour Cost @ RO 15 per hour (450) Overheads (330) Total Expenses 2100 Profit 150 After further investigation into the expenses incurred,

you identified the following points:

(a) The price of the job charged to Job 1, Job 2, Job 3 and Job 4 is RO 425, RO 600, RO 525 and 700 respectively.

(b) The raw material cost charged to Job 1, Job 2, Job 3 and Job 4 is RO 260, RO 310, RO 350 and RO 400 respectively.

(c) The labour hours used for completion of the Job 1, Job 2, Job 3 and Job 4 were 9 Hrs, 11Hrs, 12Hrs and 13Hrs respectively. 8

(d) The overheads need to be charged to the jobs based on consumption of raw material. As a cost accountant, you suggested the firm to adopt job costing technique in its firm to ascertain the profits and to determine the price of the jobs. The owners of the business have asked you to submit a report on the same for their consideration.

You are required to

a) Analyse the profitability of each job in the month of April 2020 by preparing T accounts. (4 Marks)

b) Advise the firm, how much price should be charged to each job in the next month assuming the material costs are expected to increase by 10% and assuming the firm needs a mark-up of 20%. (Round off the Job price to the nearest hundreds) (4 Marks)

c) Prepare a report to assist the owners of the business to take a decision. (2 Marks)