1- Prepare the journal entries for the following: (4 Points)
a. When raw materials are received, Give an example
b. When raw materials are sent to the factory floor, Give an example
c. When a job is completed, what happen to the cost, Give an example
d. Overhead expenses ( salary) paid by cheque $ 5000
e. Utilities (Indirect expenses) paid in cash $ 10000
f) Salaries totaling $5,000 are accrued; 35% of these costs are direct labor, 40% are indirect labor and 25% are overhead expense. Prepare the journal entry.
g) Overhead costs are allocated to work in process using an allocation rate of 150% of direct labor costs and 300% of overhead expenses.
Prepare the journal entry. (Give different examples- examples should not be same)
2- Riyadh Electricity Company manufactures chandeliers . Following is information for next year’s operations, based on an estimated volume of 20,000 units: 4 marks
Expected revenues $1,000,000
Direct materials $ 6.25
Direct labor 15.75
Variable overhead 5.50
Fixed manufacturing overhead 2.50
Other fixed costs:
Administration, marketing, etc. $225,000
Income tax rate 30%
a. What is the breakeven point for next year?
b. What is next year’s projected after-tax income?
c. Suppose the managers set a target after-tax income of $100,000. Estimate the number of units that must be sold.
3-Ahmed has budgeted next year’s sales at 8,000 units. (2 marks )
Compute Ahmed’s degree of operating leverage. If P = 1,000, V = 400, F = 850,000.
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