Modern College of Business and Science Management Accounting Cases Studies see file attached  …………………………….. …………………….

Modern College of Business and Science Management Accounting Cases Studies see file attached 
……………………………..
………………………………………..s Case Study 2
P & G, LLC is producing three products soap, handwash and moisturizing cream.
P & G till now applying traditional costing method to determine the total cost and cost per unit of
each product. Company wants to switch to ABC system in order to understand the accurate
performance of each product. You have given this job to compare between both costing methods
in order to determine which product is more profitable to the company and which one is least.
Production detail: Company produces 200,000 units of soaps; 150,000 units of handwash; 50,000 units of
moisturizing cream.
Overheads, Activity and Cost Driver Details: (i)
The labour hour per units 0.01 for soap; 0.02 for handwash; and 0.05 for moisturizing
cream.
(ii)
The production costs incurred RO 1,800. Number of machines runs 40 times for soaps;
50 times for handwash; 60 times for moisturizing cream.
(iii)
The assembly costs incurred RO 1,500. Labor on assembly of components 150 hours
for soaps; 200 hours for moisturizing cream; 180 hours for handwash.
(iv)
The packaging costs incurred RO 1,200. All the products packed separately.
(v)
The delivery costs incurred RO 1,000. No. of deliveries for soaps 40 times, for
handwash 32 times and for moisturizing cream 18 times.
Prime Cost Details: (i)
RO 0.075 per unit on direct materials and RO 0.038 per unit on direct labour paid for
soap.
(ii)
RO 0.450 per unit on direct materials and RO 0.075 per unit on direct labour paid for
handwash.
(iii)
RO 0.550 per unit on direct materials and RO 0.100 per unit on direct labour paid for
moisturizing cream.
Requirements: 1. Calculate total cost and cost per unit of each product by applying absorption costing.
[5 Marks]
2. Calculate the total cost and cost per unit of each product by applying ABC system.
[5 Marks]
3. Calculate the selling price by adding 20% mark up on cost for all products. Also, Analyze
over costing and under costing for all products.
[2.5 + 2.5 Marks]
Case Study 3
Ahmed LLC Trading Company has produced 20,000 units which is 40% capacity level in the
factory. The company has used raw material to make the production worth of RO 55 per unit. The
company has incurred direct labour cost at RO 28per unit along with direct expenses RO 22 per
unit. The company spent RO 200,000 on fixed expenses in the factory with a per unit cost of RO
10. Other factor expenses for the total production of 20,000 units has arrived at RO 12 per unit.
Administration expenses were incurred RO 8 per unit out of which fixed expenses belongs to 55%.
Company has appointed a salesman for selling the products produced in the company at RO 8 per
unit produced out of which 30% belongs to fixed. The company has also incurred distribution
expenses of RO 8 per unit out of which 30% are variable.
Requirements: The company has approached the you and ask to prepare the flexible budgets for
two more required capacity levels; 1. 10,000 units and
[2.5 Marks]
2. 25,000 units
[2.5 Marks]
Case Study 4
Ghanim Trading Company is in the business of buying and selling of different types of building
material products in Salalah region and provided the following data to understand the cash position
every month start from January to July. The sales book reported the sales amount for seven months
as below:January
February
225,000
260,000
March
April
May
June
245,000
255,000
267,000
236,000
July
212,000
The sales reported every month including cash sales and credit sales. Cash sales constitute 25% of
total sales collected in the month of sales and the balance is credit sales received in the month
following the month of sales.
The detail of goods purchased in cash during seven months reported in purchase book as below: January
February
12,000
14,000
March
16,000
April
18,000
May
20,000
June
July
22,000
24,000
Company also purchased goods on credit from different suppliers. The detail of credit purchase
from the month January to July is given below: January
February
75,000
72,000
March
78,250
April
68,750
May
49,800
June
July
60,000
65,900
Cash purchases payable in the month of purchases and credit purchases are payable to supplier in
two months following the month of credit purchase.
It is also found from the accounting records that the company purchased plant and equipment for
RO 15,000 in the month of March and it is payable in three equal instalments starting from April.
Tax department has sent a notice to the company to pay taxes of RO 6,000 each in the month of
May and June.
The wages and office expenses are paid in the month following the month in which wages and
office expenses incurred. The detail of wages and office expenses is given below: January
February
March
April
May
June
July
Wages
6,000
6,250
6,750
6,780
6,900
7,800
6,800
Office Expenses
4,500
4,750
4,800
4,900
5,100
5,620
4,100
The selling expenses of the company recorded for the seven months are as follows: January
February
2,650
2,850
March
3,150
April
3,650
May
3,680
June
3,250
July
3,850
The company also incurred administrative expenses for the period January to July. The detail of
administrative expenses is given as below: January
February
2,200
2,300
March
3,520
April
2,560
May
2,560
June
3,850
July
2,180
The company is paying the selling and administration expenses in one months following the month
in which such expenses incurred.
The cash balance as on 1st April is RO 32,500.
Requirement: The Company has requested you to prepare Cash budget for the period of April to
June.
[10 Marks]
Case Study 5
Mohammed Company Ltd. producing biscuits and other bakery products all over Oman. Company
furnished the following information to measure its performance by using different ratios for the
year 2019: Company started its business with share capital and debts of RO 3,000,000 consisting of 275,000
shares of RO 7.500 each and bonds payable RO 937,500. Company’s assets including inventories
reported worth RO 128,750, cash available in the office RO 32,500 and at bank 237,500. At the
end of 2019, building worth RO 1,250,000, machinery worth RO 435,000. Later in the year
company purchased furniture worth of RO 59,850. In the year 2019, company has made the sale
of RO 2,250,800 by incurring cost of goods sold RO 1,780,500 and operating expenses RO
322,500.
The income from other sources reported RO 45,800. Company paid interest of RO
15,600 on bonds payable in the year 2019. The total outstanding expenses and accounts payable
reported RO 10,500 and RO 164,500 at the end of the year 2019.
Company also paid taxes at 15% on net profit. The dividend declared and paid 18.5% on PAT.
The market value of the shares at the end of the year RO 8.750 each.
Requirements: – Calculate the following ratios: a. Shareholder’s Ratios by showing all required calculations and formulas.
[4 Marks]
b. Profitability Ratios by showing all required calculations and formulas.
[4 Marks]
c. Current and Quick Ratio by showing all required calculations and formulas.
[2 Marks]

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