Which independent variable explains more of the variation in marketing department costs?

cost aact

Assignment 1 Cost accounting

Last Date for Submission 17th February 2018

You are required to work in this assignment individually.

Any suspicious activities or cheating will result zero grade in this assignment.

Assignment 1
Course Title Cost Accounting Code ACCT 301
Uploading End of week 3 Submission End week 4
Date Sat 10/02/2018 Dates Sat 17/02/2018


· Students must include your details (Name, Student ID, CRN, Date of submission)

· Answer the ALL questions.

· Do NOT write the questions in the answer papers JUST write the question number.

· Assignments should be submitted in MS Word format

· Font should be Times New Roman with 14 points.

· You are required to work in this assignment individually.

· You should submit the assignment via the Blackboard.

· Students who submit assignments after deadline, will get ZERO.

· If you engaged in plagiarism, you will get ZERO marks in the assignment or course.

Q 1 Every organisation faces risks of unethical or illegal behaviour of its employees that should be avoided. Suggest the measures that control such behaviours of the employees in an organisation.

Q 2 Abdul Car Rental charges its customers SAR 26 per day plus SAR 0.20 per mile. Its competitor Ahmad rents cars for SAR 35 per day plus SAR 0.08 per mile.

How many miles you need to drive on a four day rental so that the cost of the two alternatives would be same?

Q 3 Saad Company is developing a cost function for its production costs using the high-low method (Two-Point Method: high and low point). The following data have been collected for the year 2017:

Number of units Total cost of



1 4,000 $ 690

2 5,900 883.8

3 7,800 1077.6

4 9,000 1,200

Calculate the following amounts:

a. The variable cost per unit

b. The fixed cost

c. The estimated total cost for 11,000 units.

d. The estimated total cost for 5,000 units.

Q 4 Following are the results from two different simple regression analyses estimating the costs of the marketing department using number of sales persons and number of units sold as cost drivers.

Variable Coefficient t-statistic p-value
Intercept 500.75 4.05 0.03
Number of sales persons 20.50 6.10 0.004
Adjusted R-square = 0.80
Variable Coefficient t-statistic p-value
Intercept 700.23 0.98 0.30
Number of units sold 120.33 3.66 0.05
Adjusted R-square = 0.49

a. Which independent variable explains more of the variation in marketing department costs?

b. Choose the most appropriate cost driver and write the cost function.

c. What are the examples of uncertainties that could affect the accuracy of the cost function in estimating the cost for the next month.

Q 5 Assume that you are working as Cost Accountant for Saudi Ceramic Company and it is estimating the fixed and variable costs. The following costs were incurred during the month of December 2017 by Saudi Ceramic Company when 330 products were manufactured. The Saudi Ceramic Company has the following cost. Wages for Labor: SAR 10,640, Raw Material & Supplies: SAR 3,960, Depreciation on Plant and Equipment: SAR 1,073, Plant Manager Salary: 2,310 and Office Rent: SAR 1,403.

Determine a cost function of Saudi Ceramic Company by describing all the steps of determination of the cost function in detail.

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