Question 1
Discuss the Treatment of Normal and Abnormal Spoilage under Job Costing.
Question 2
Why are Business Managers using the Cost-Volume-Profit Analysis? Critically explain the advantages and Disadvantages of using Cost-Volume-Profit Analysis.
Question 3
What is a Job Costing system? How Does Job Costing information affect Managers incentives and Decisions.
Question 4: Critical Thinking
Abdullah completed a cost-volume-profit analysis for Al Tawfiq Company for the next year. Abdullah notes the decrease in volumes and prepares the breakeven analysis and computes the margin of safety; he notes that the margin of safety will be positive for the period. However, the company will not achieve the sales volume required to achieve its desired level of operating and net income. The degree of operating leverage is high. You has been tasked with suggesting some cost savings.
Instructions
- Identify whether you should reduce variable or fixed costs.
- What will be the impact on the company in the future?
- What suggestion you will give to company for cost savings.