Accounting Assignment: DCT Corporation and Operating Decisions

Acct 301 – Assignment 3
Student Name
University Name
Course Name
Instructor’s Name
Due Date
Question 1
DCT Corporation is in the manufacturing of soft drinks and produces three products, X, Y, and Z. During the year 2014, the joint costs of processing the three products were SAR 450,000. The following are the information related to production and sales value:
Product

Units

Sales Value at Split-Off

Separable Costs

Selling Price

X

675,000

SAR 25 per unit

SAR 11.00 per unit

SAR 75 per unit

Y

525,000

SAR 21 per unit

SAR 7.00 per unit

SAR 68 per unit

Z

300,000

SAR 17 per unit

SAR 7.00 per unit

SAR 52 per unit

Allocate the joint costs to each product using the physical output method.
Answer
Joint cost for processing the three products = SAR 450,000
The total sum of Units = (675,000) + (525,000) + (300,000)
= 1,500,000 Units
Hence the production proportion of the products = Product UnitThe total sum of Units
Product X = 675,0001,500,000
= O.45
Product Y = 525,0001,500,000
= 0.35
Product Z = 300,0001,500,000
= 0.2
The Joint cost allocation for each product =
(The production proportion × The joint cost for processing the three products)
Therefore:
Joint cost allocation for product X = (0.45 × 450,000)
= 202,500
Joint cost allocation for product Y = (0.35 × 450,000)
= 157,500
Joint cost allocation for product Z = (0.2 × 450,000)
= 90,000
Question 2 What are "Non-routine Operating Decisions?" Examine anyone's non-routine operating decision with a suitable example and discuss what quantitative and qualitative factors should be considered in making such a decision?
Patty Graybeal (2019) describes non-routine operating decisions as those one-time decisions that are made during a tactical situation in business and which are typically not included in the daily business operations. An example of such decisions includes accepting or rejecting a particular order for a certain product at a lower price than the usual or standard price (Patty Graybeal, 2019). Acceptance and rejection of this particular order depending on the incremental costs and revenues. If the incremental costs are higher than the revenues, the order is rejected, but if the incremental revenues are higher than the costs, the order is accepted. The quantitative factors considered in such a scenario include:
* The company resources needed to complete the particular order
* The costs offered by the customer and the production costs
* Fixed costs
* Whether the decision will disrupt the normal business operations
* Whether the decision affects the fair pricing legislations
* Qualitative factors include the impacts the decision has on the existing customer base, especially if a product is sold at a lower price than the usual price.
Question 3
ABC Ltd. is preparing a budget for 2015. Following are the information related with budget preparation:
Budgeted selling price per unit = $150 per unit
Total fixed costs = $80,000
Variable costs = $50 per unit
Required:
Prepare flexible budget for 1,200, 1,400, 1,600 and 1,800 units.
Answer:
So the Total Units selling price = (units × Budgeted selling price of $150 per unit)
= (1,200 × $150) = $180,000
= (1,400 × $150) = $210,000
= (1,600 × $150) = $ 240,000
= (1,800 &...