Q1. What types of companies use job costing? How are overhead allocation rates determined by these companies? Explain and analyze your answer by providing examples of two Saudi companies that use job costing. (1.5 Mark)

Answer:

Q2. Axel Ltd. uses a process costing system for its sole processing department. There were 16,000 units in beginning WIP inventory for March and 144,000 units were started in March. The beginning WIP units were 70% complete and the 13,000 units in ending WIP were 50% complete. All materials are added at the start of processing. (2 Mark)

Required:

a) Compute the no. of units started & completed.

b) Compute the EUP for DM and CC using FIFO and WA methods.

c) Calculate total manufacturing cost/EUP under both methods, if following details are available:

	FIFO	WA
Direct Material Cost	SAR 648,000	SAR 800,000
Conversion Cost	SAR 853,800	SAR 1,151,250

Answer:

Q3. How are activities identified in an organization and the process of assignment of cost is used under Activity Based Costing (ABC) system? Explain. Support your answer with numerical examples. (1.5 Mark)

Answer: