ACCT 301 Explain the role of accounting information in strategic management

Posted: February 15th, 2023

Assignment (1)

Course Code: ACCT 301 Student’s ID Number: S210019578
Semester: Second CRN: 24488

Assignment Question(s): (Marks 15)
Q1. Explain the role of accounting information in strategic management. How does accounting information assist in the formulation and implementation of organizational strategies? Support your answer by providing an example of one Saudi Company in this regard. (2 Marks)

Note: Your answer must include a suitable example showing the role of accounting information in strategic management of an organization. (Chapter 1, Week 1)
Answer:

Q2. What do you mean by cost function and for what purpose does it serve for? What are the various methods used to estimate cost functions? Explain each method with suitable numerical examples. (3 Marks) (Chapter 2, Week 2)
Answer:

Q3. TTL Corporation is in the manufacturer of several plastic products. TTL sells its one of the plastic product for SAR 500. The variable costs per unit are SAR 200, and the total fixed costs are SAR 510,000. Based on cost-volume profit analysis, calculate: (4 Marks)
a) Contribution margin per unit and contribution margin ratio.
b) Break-even point in units and sales SAR.
c) Pretax profit if the company sells 2,200 units.
d) Profit/loss if the company sells 1,500 units.
e) Units needed to reach target pretax profit of SAR 180,000.
f) Sales SAR needed to reach the target pretax profit of SAR 180,000. (Chapter 3, Week 3)
Answer:

Q4. “Job costing is a method of cost accounting used by companies to find out the cost of specific jobs or projects.” Comment on this statement and examine how actual allocation rates and estimated allocation rates are analyzed by the companies? Support your answer with an example of one Saudi company that use job costing. (2 Marks) (Chapter 5, week 4 )
Answer:

Q5. A company uses a process costing system for its sole processing department. There were 4,000 units in beginning WIP inventory for June and 36,000 units were started in June. The beginning WIP units were 60% complete and the 3,250 units in ending WIP were 40% complete. All materials are added at the start of processing. (4 Marks) (Chapter 6 Part 1, Week 5)
Required:
a) Compute the no. of units started & completed.
b) Compute the EUP for DM and CC using FIFO and WA methods.
Answer:

Writing Guide:’
Q1. The Role of Accounting Information in Strategic Management:

Explain the role: Accounting information serves as a vital foundation for strategic decision-making by providing insights into an organization’s financial health, performance, and resource allocation. It helps assess strengths, weaknesses, opportunities, and threats (SWOT analysis) and evaluate the financial feasibility of strategic options.
Support with an example: Research a successful Saudi company (e.g., Saudi Aramco, SABIC) and analyze how they use accounting information in their strategic planning. Cite scholarly sources to support your claims.

Q2. Cost Functions and Estimation Methods:

Define cost function: A cost function expresses the relationship between the total cost incurred and the level of output produced.
Purpose: It helps predict costs at different production levels, optimize resource allocation, and evaluate the impact of changes in production volume on profitability.
Estimation methods: Explain and provide numerical examples for:
High-low method
Least-squares regression
Scatterplot analysis
Engineering estimation (for relevant industries)

Q3. TTL Corporation Cost-Volume-Profit Analysis:

Carefully calculate the contribution margin per unit, contribution margin ratio, break-even point, and profit/loss scenarios based on the provided information and cost-volume-profit (CVP) formulas. Show all calculations clearly.

Q4. Job Costing Analysis and Example:

Discuss the statement on job costing, highlighting its advantages and limitations.
Explain the concepts of actual and estimated allocation rates, their analysis methods (reconciliation, over-/underallocated costs), and provide an example of a Saudi company using job costing (e.g., construction, printing).

Q5. Process Costing Calculations:

Calculate the number of units started and completed using the provided information.
Compute the equivalent units for direct materials and conversion costs using both FIFO and weighted average (WA) methods, demonstrating the calculations step-by-step.

Remember:

Use credible sources to support your answers and cite them properly using Harvard referencing format.
Present your work in a clear, organized, and professional manner.
Avoid plagiarism and ensure your response is original and reflects your own understanding.