Cost Accounting

Running head: COST ACCOUNTING
Cost accounting
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1COST ACCOUNTING
Table of Contents
Answer 1..........................................................................................................................................2
Answer 2..........................................................................................................................................2
Answer 3..........................................................................................................................................3
Bibliography....................................................................................................................................5

2COST ACCOUNTING
Answer 1
South steel company from Saudi Arabia that is engaged in building the integrated steel
mill for producing steel billets is planning to manufacture 270000 units in 2nd quarter (April to
June). Material budget for the entity will be as follows –
Units to be produced 270000
Direct material required per unit 1.2
Total material required (unit) 324000
Desired closing inventory 60000
Total required production 384000
Less: opening inventory 84000
Materials to be purchased 300000
Cost of steel *SAR 22.25
Total cost for steel *SAR 6675000
*SAR stands for Saudi Arabian Riyal
Answer 2
Ravago Middle East Company (RMEA) from Saudi Arabia is engaged in reprocessing of
synthetic rubber material and the polymer compound production. Budgeted sales of the entity are
12000 units at a price of SAR 150.5 with the production cost of SAR 80.5 per unit. The actual
sales revenue is SAR 20,37,000 and 14000 units were sold. Hence, it can be identified that –
Units Selling price per unit (SAR) Profit per unit (SAR)
Budgeted 12000 150.5 70
Actual 14000 145.5 65
Sales price variance = (Actual sales price – budgeted sales price) * actual sales unit