ACCT 301 UArizona Contribution Margin per Unit and Contribution Margin Ratio Questions

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College of Administration and Finance Sciences
Assignment (1)
Deadline: Saturday05/03/2022@ 23:59
Course Name:Cost Accounting
Student’s Name:
Course Code:ACCT 301
Student’s ID Number:
Semester: 2nd
CRN:
Academic Year: 1443 H
For Instructor’s Use only
Instructor’s Name:
Students’ Grade: /10
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 usingTimes 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.
College of Administration and Finance Sciences
Q2. X Ltd. manufactures plastic products and sells them for SAR 350 per unit. The firm’s
variable cost per unit is SAR 90, while its total fixed costs are SAR 110,000. The company
expects to sell 1,800 units in the coming year. Calculate the following:(2 Marks)
a) Degree of operating leverage
b) Margin of safety in units
c) Margin of safety in SAR value
d) Margin of safety in percentage
Answer:
Q3. What is regression analysis and how does it help in estimating a cost function? Interpret
your results with a numerical example.(2 Marks)
Answer:
Q4. A plastic product is manufactured by SLT Company. For total costs, the company
estimates the cost function. The number of units is the cost driver. The following details were
gathered:
(2 Marks)
Month
March
April
May
June
July
Units
4,370
4,680
5,000
5,300
5,600
Total Cost (SAR)
44,300
44,600
45,000
45,400
47,500
College of Administration and Finance Sciences
August
September
October
5,900
3,400
4,100
57,500
40,000
40,625
Use the high-low analysis method and answer the following:
a) Calculate Variable Costs and fixed costs.
b) Determine the cost function.
Answer:
Q5. The following information is related to CTH Corporation which manufactures a single
product:
(2 Marks)
Selling price per unit:
SAR 800
Variable cost per unit:
SAR 240
Total fixed cost:
SAR 400,000
You are required to calculate:
a) Contribution margin per unit and contribution margin ratio.
b) The break-even point in units and break-even point is sales value SAR.
c) Pretax profit of the company if it sells 1,400 units of the product.
d) The number of units required to sell to reach a target pretax profit of SAR 200,000?
Answer:
College of Administration and Finance Sciences

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Tags:
Operating Leverage

cost accounting

Variable cost

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