CRITICAL THINKING ASSIGNMENT:
Complete the following three questions using Microsoft Excel. No other submission
format is allowed. Review the grading rubric to confirm you are meeting the assignment
requirements.
Problem 1
Milwaukee Dairy Company produces cream, whole milk, and 2% milk. The joint cost of
producing the three products is SAR 30,000. The split-off quantities and selling prices of
each product are as follows:
Split-off Quantity (Gallons)
Price at Split off (SAR)
Cream
500
20.00
Whole milk
4,500
12.00
2% milk
1,000
6.00
Required:
Calculate how much of the joint costs should be allocated to each product
using the market value at split off method.
Problem 2
The following information pertains to Delicious Bakery Company:
GIVEN:
Janitorial Dept. Cafeteria Dept. Mixing Dept. Baking Dept.
Square feet
400
800
3000
2000
Number of employees
10
20
60
100
Department cost (SAR)
600,000
1,000,000
3,000,000
4,000,000
Required:
Allocate Janitorial and Cafeteria department costs to mixing and baking
departments using the Direct method. Use square feet for allocating janitorial costs and
number of employees for allocating cafeteria department costs.
Problem 3
Maintenance Hours Maintenance Cost (SAR)
January
2,500
32,500
February
1,800
29,000
March
2,800
32,000
April
1,200
16,000
May
1,600
22,500
June
2,200
27,000
a.
b.
c.
Required:
Calculate variable cost per unit using the high-low method.
Calculate fixed costs.
Calculate estimated costs at 2,700 maintenance hours.
Problem 4
Given the following:
Total (SAR)
Sales (40,000 units)
4,800,000
Variable expenses
2,880,000
Contribution margin
1,920,000
Fixed expenses
Net operating income
a.
b.
c.
d.
e.
1,200,000
720,000
Required:
Calculate variable expense ratio
Calculate contribution margin ratio
Calculate break even sales in Units
Calculate break even sales in SAR
How many units must be sold to make a profit of 300,000 SAR?
Management is considering increasing the quality of its units by spending SAR 5 more
per unit in variable costs and increasing advertising by SAR 80,000. Management
believes these changes will increase unit sales by 20% at the same price.
f.
g.
Calculate the new operating profit or loss.
Explain whether management should make the change and why or why not.
You must show all your work for credit.