Assignment Question(s):(Marks 10)
Q1. Examine with suitable examples, how “organization strategy provides a valuable contribution in achieving organization vision?” Give an example of a Saudi company and assess two examples of organizational strategies and operating plans.(2 Marks)
Answer:
Q2. X Ltd. manufactures plastic products and sells them for SAR 350 per unit. The firm’s variable cost per unit is SAR 90, while its total fixed costs are SAR 110,000. The company expects to sell 1,800 units in the coming year. Calculate the following:(2 Marks)
a) Degree of operating leverage
b) Margin of safety in units
c) Margin of safety in SAR value
d) Margin of safety in percentage
Answer:
Q3. What is regression analysis and how does it help in estimating a cost function? Interpret your results with a numerical example.(2 Marks)
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Q4. A plastic product is manufactured by SLT Company. For total costs, the company estimates the cost function. The number of units is the cost driver. The following details were gathered:
(2 Marks)
| Month | Units | Total Cost (SAR) |
| March | 4,370 | 44,300 |
| April | 4,680 | 44,600 |
| May | 5,000 | 45,000 |
| June | 5,300 | 45,400 |
| July | 5,600 | 47,500 |
| August | 5,900 | 57,500 |
| September | 3,400 | 40,000 |
| October | 4,100 | 40,625 |
Use the high-low analysis method and answer the following:
a) Calculate Variable Costs and fixed costs.
b) Determine the cost function.
Answer:
Q5. The following information is related to CTH Corporation which manufactures a single product: (2 Marks)
Selling price per unit: SAR 800
Variable cost per unit: SAR 240
Total fixed cost: SAR 400,000
You are required to calculate:
a) Contribution margin per unit and contribution margin ratio.
b) The break-even point in units and break-even point is sales value SAR.
c) Pretax profit of the company if it sells 1,400 units of the product.
d) The number of units required to sell to reach a target pretax profit of SAR 200,000?
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