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Assignment (2)
Deadline: Saturday 02/08/2025 @ 23:59
Course Name: Managerial Accounting
Student’s Name:
Course Code: ACCT 322
Student’s ID Number:
Semester: Summer
CRN:
Academic Year: 1446 H/2025 G
For Instructor’s Use only
Instructor’s Name:
Students’ Grade:
/15
Level of Marks: High/Middle/Low
Instructions – PLEASE READ THEM CAREFULLY
• The Assignment must be submitted on Blackboard (WORD format only) via allocated
folder.
• Assignments submitted through email will not be accepted.
• Students are advised to make their work clear and well presented, marks may be
reduced for poor presentation. This includes filling your information on the cover
page.
• Students must mention question number clearly in their answer.
• Late submission will NOT be accepted.
• Avoid plagiarism, the work should be in your own words, copying from students or
other resources without proper referencing will result in ZERO marks. No exceptions.
• All answers must be typed using Times New Roman (size 12, double-spaced) font.
No pictures containing text will be accepted and will be considered plagiarism.
• Submissions without this cover page will NOT be accepted.
1
College of Administration and Finance Sciences
Assignment Question(s):
(Marks 15)
Q1. Why do corporations use variance analysis? Explain how managers compute
material variance and labor variance.
Answer:
Q2. Assume that you are preparing a Master Budget for a reputed corporation. Bring
out numerical examples on the complete master budget of the corporation.
Answers:
Q3. XYZ Company is considering purchasing new equipment costing SAR 250,000.
The company’s management has estimated that the equipment will generate cash
flows as follows (SAR):
Yea
r
1
2
3
4
Net Cash Flow
90,000
75,000
85,000
75,000
PV @10%
0.9091
0.8264
0.7513
0.6830
The company’s required rate of return is 10%. Calculate the net present value and give
reasons on whether the project should be accepted or rejected.
Answer:
Q4a. Assume a company manufactures cars and currently uses only 50% of its
manufacturing facility 20,000 cars). The company could utilize more of its facility by
producing its own tires. It currently purchases tires at SAR 30 per set of four. If the
company would incur SAR14 per set for direct materials, SAR11 for direct labor, and
2
College of Administration and Finance Sciences
SAR 8 for overhead (variable) to produce the tires.
Required: Compute why the company should, make or buy the tires, in any scenario
give your decision why?
Answer:
Q4b. The cost to produce one unit of the product is:
Material
SAR 13.00
Labor
8.00
Variable cost
7.00
Fixed expenses
18.00
Total fixed expenses: $ 500,000
The company has received a special order for 20,000 units for a price of SAR 36 per
unit from a foreign customer.
Required: Advice the manufacturer on whether the order should be accepted or rejected.
Answer:
3
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