Question

ACCT 301

ASSIGNMENT 4

1. You are required to prepare a Direct Material Budget for the second quarter (April to June) by considering a manufacturing company operating in Saudi Arabia as a sample study.                                                                          (4marks)

2. You are required to prepare the Sales price variance and Revenue sales quantity variance by taking any of your choice Saudi based company and suggest the suitable reasons for the variances.                                                              (3marks)

3. You are required to allot the support department cost to operations department by taking any Saudi based operating company.                            (3marks)

Answer 1

Prepare adirect material budget for the second quarter (april to june) by considering a manufacturing company operating in Saudi Arabia as a sample study. Due to the direct material budgets shows the amount of material i.e, required to fulfill the manufacturing needs and safety stocks for the company policy, the direct material budget is essential to prepared at beginning of every quarter or month.

	Considering values quarter 2
Units to be produced(a)	1400
Direct material per unit(b)	1
Production needs(a*b)= (c)	1400
Desired ending inventory(d)	160
Total needs(e)=(c+d)	1560

Beginning inventory(f)	-126
Purchased direct material(g)=(e+f)	1434
Cost of day(h)	$3
Total purchase cost of day(i)=(g*h)	4302

Prepare the sales price variance & revenue sales quantity variance by taking any of your choice Saudi based campany and suggest suitable variance reasons. because of the price of actual sale is low or high than the product budgeted sales price the product is not sold at price that has been budgeted for the product this means the sales price variance.when the actual sales quantity of productdoes not actual get sold for that quantity the revenue sales quantity variance is happened. When the product demand reduced due to the some changes in technology & obsolescence the sales price variance and the sales quantity variance reasons are same.

Sales variance = actual sles price – budgeted sales price

Product car (considering value)

Budgeted sales price = 10

Actual sales price = 20

Sales variance = 20-10 = 10

The sales variance is +ve value it is favourable.

Bike (with considering values)

Budgeted sales price = 20

Actual sales price =34

Sales variance = 34-20=14

The sales variance is +ve . it is favorable.

Tractor (with considering values)

Budgeed sales price = 30

Actual sales price = 18

Sales variance = 18-30 = -12

The sales variance is –ve it is unfavorable

Allot the support department cost to operations department by taking any based Saudi operating company. the cost of service department company incurs is allocated to the production department in some of percentages that is based on some of the predetermined rule book therefore the service department work for production department of company.

Service department cost	Production	Production 2	Production 3
Maintenance	12%	16%	20%
Fixing cost	14%	14%	16%
Esdation cost	14%	20%	18%