Q1. List the two types of fixed costs and give example .

Q2. Present and explain the equation of the total mixed cost line.

Q3. Why use an allocation base?

Q4. The following information summarizes the company's cost structure: Variable cost per unit .........SAR1.3 Fixed cost per unit .............SAR4.5 Total cost per unit ..............SAR 5.8 Units produced and sold ... SAR48,000

Required:

Estimate the following costs at the 40,000 unit level of activity:

a. Total variable cost. b. Total fixed cost. c. Variable cost per unit. d. Fixed cost per unit.

Q5. ABC Corporation manufactures two products, Product M and Product N. Product N is of fairly recent origin, having been developed as an attempt to enter a market closely related to that of Product N. Product N is the more complex of the two products, requiring one hour of direct labor time per unit to manufacture compared to one-half hour of direct labor time for Product M. Product N is produced on an automated production line.

Overhead is currently assigned to the products on the basis of direct labor-hours. The company estimated it would incur SAR 500,000 in manufacturing overhead costs and produce 10,000 units of Product N and 60,000 units of Product M during the current year. Unit cost for materials and direct labor are:

Product M Product N Direct material. .... SAR 10 SAR 24 Direct labor SAR 8 SAR 12Estimated Overhead Expected Activity Costs Product M Product N Total Activity cost Pools Machine setups required ..... SAR 200,000 800 1.200 2,000 Purchase orders issued...... 43,500 500 100 600 Machine-hours required . 104,000 3,000 10.000 13.000 Maintenance requests issued... 152.500 860 1.140 2.000 SAR 500,000