ASSIGNMENT - 2 Accounting

College of Commerce and Business Administration
ASSIGNMENT 2
SPRING 2021-22
Course Code BUSS 104

Course Name Principles of Management Accounting
Section ALL SECTIONS
Instructor
Student Name
Student ID
Due Date 15TH MAY 2022
Submission Date
DECLARATION
I hold a copy of this assignment if the original is lost or damaged.
‫تدقف وا تفلتا دق ةيلصالا ةخسنال نا الح يف بجاوال اذه نم ةخسنب ظفتحأ‬
I hereby certify that no part of this assignment or product has been copied from any other student’s
work or from any other source except where due acknowledgement is made in the
assignment.
.‫رخا ردصم نم وا رخا بالطل بجاو يا نم هخسن مت دق بجاوال اذه نم ءزج يأ دجوي ال هناب رقأ‬. ‫ االوصا سبتقملا ءزجلا ىال ةراشالا مت دقو‬I hereby
certify that no part of this assignment or product has been submitted by me in another
(previous or current) assessment, except where appropriately referenced, and with prior permission
from the instructor of this course.
.‫ ررقمال اذهل قباسال سردملا ةقفاوم ذخا دعب الا رخا ررقم يف ااقباس هميلست مت دق بجاوال اذه نم ءزج يأ دجوي ال هناب رقأ‬No
part of the assignment/product has been written/produced for me by any other person except
where collaboration has been authorised by the instructor concerned.
.‫ ررقمال ذاتسا ةقفاومب كرتشم بجاوال اذه ناك اذا ادع رخا بلاط هدعا دق بجاوال اذه نم ءزج دجوي ال‬I am
aware that this work will be reproduced and submitted to plagiarism detection software programs for the
purpose of detecting possible plagiarism (which may retain a copy on its database for future
plagiarism checking).
)‫تدجو نا( ةيملعال ةقرسالو ةباشتال ةبسن ديدحت ضارغال صحفلل عضخي فوس لمعال اذه نا كردا‬
Student’s signature:
Note1: An Instructor has the right to not mark this assignment if the above declaration has not been signed.
.‫ةظحالم‬: ‫ ةقباسال تارارقالا عيقوت متي مل اذا بجاوال اذه حيحصت مدع يف قحال ررقمال سردمل‬Note2:
Original for the Instructor and one copy with signature the Instructor for the student.
.‫بالطلل ىطعت سردمال عيقوت عم )بالطال لمع نم( ةيناث ةخسنو ررقمال سردمل ىطعت ةيلصالا ةخسنل‬
Question 1: Muscat Company has the financial information given in the table for
the year ended on 30 September 2021. It is assumed that volume of production
and volume of sales are equal. According to the information given, you are
required to calculate the following;
a) Break-even point (in units and amount)
b) PV ratio
c) Margin of Safety (as amount and as percentage)
OMR
Sales (actual) 1,600,000
Total fixed cost 900,000
Selling price per unit 375
Variable cost per unit 225
Answer
OMR
Sales (actual) 1,600,000
Total fixed cost 900,000
B Selling price per unit 375
Calculation
Variable cost per unit 225
BEP (units) = Fixed Costs ÷ (Sales price per unit – Variable costs per
unit) Breakeven point 135,000,000
900000 *(375-225) =135,000,000
PV ratio = Sales –variable / sales
PV Ratio
Sales (actual) 1600000

Total fixed cost 900000
Selling price per 375
unit
Variable cost per 225
unit
contribution 150
PV Ratio 40%
C
Margin of Safety
Actual sales 1,600,000
Less; BEP 135,000,000
Divide: selling price 375
per unit
Margin of safety 1240000
Question 2: Nizwa Company has the following information given in OMR.
OMR
Fixed Cost 14750
Break even Sales 20000
You are required to calculate the values below;

a) PV Ratio
b) Profit when sales are 25000
c) New BE point if selling price is reduced by %20
A
PV Ratio
OMR
Fixed Cost 14750
Break even Sales 20000
PV Ratio 0.7375%
B
sales 25000
Profit Sales minus cost (25000-14750) =10250 10250
less 20% 5000

20000
new BE sale= variable cost + fixed cost
Sales 20000
variable cost ?
fixed cost 14750
new BE 20000= Variable cost + 14750
*Variable cost = (20000 - 14750 ) = 5250 5250
Break even new variable cost + fixed cost 20000
point
C
Question 3: Mirbat Company’s financial information is given in the table below.
Year Sales (OMR) Fixed Costs Variable Costs

2020 445000 105000 245000
2021 500000 150000 280000
You are required to calculate the following values for each year. The years are
independent of each other.
a) P/V ratio,
b) B.E.P.
c) Sales required to earn a profit of OMR 45000.
d) Margin of safety at a profit of OMR 50000
e) Profit when sales are OMR. 300000.
contribution 200000
2020 PV 44.94%
PV = 200000*100/445000 = 44.94%
*Contribution = 445000-245000 = 200,000
*P/V ratio =contribution x100/sales (*Contribution means the difference between sale price and
variable cost).
contribution 220000
2021 PV 44
PV = 200000*100/445000 = 44. %
*Contribution = 500000-280000 = 220,000
B
contribution margin = total revenue - variable cost / variable cost

2020 CM = 445000-245000/445000 = 44.9%
2021 CM=500000-280000/500000 = 44%
2020 breakeven point = fixed cost / contribution margin

breakeven point = 105000/0.449 =47145
2021 breakeven point = fixed cost / contribution margin

breakeven point = 150000/0.44 =340909
Question 4: Oman Company manufactures two products OM1 and OM2. Its sales
department has three divisions: Salalah, Muscat and Sohar.
Initial estimates for the sales budgets for the year ending 31 December 2021 which
are based on the assessments of the divisional executives are as follows;
Product OM1 : Salalah 55,000 units: Muscat 115,000 units and Sohar: 28,000 units
Product OM2: Salalah 73,000 units: Muscat 88,000 units and Sohar:0
Sales Prices: OM1: 4 OMR and OM2= 5 OMR in all areas.

Arrangements are made for the extensive advertising of product OM1 and OM2 and
it is estimated that Salalah division sales will increase by 32,000 units. Arrangements
are also made to advertise and distribute product OM2 in the Sohar area in the
second half of 2021 when sales are expected to be 110,000 units.
Since the estimated sales of the Muscat division represented an unsatisfactory

target, it is agreed to increase both the estimates by 18 %.
Prepare a sales budget for the year to 31 December 2021.

ASSIGNMENT - 2 Accounting

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College of Commerce and Business Administration

Course Code BUSS 104

Sales (actual) 1600000

Question 2: Nizwa Company has the following information given in OMR.

You are required to calculate the values below;

less 20% 5000

Question 3: Mirbat Company’s financial information is given in the table below.

Year Sales (OMR) Fixed Costs Variable Costs

contribution margin = total revenue - variable cost / variable cost

2020 breakeven point = fixed cost / contribution margin

2021 breakeven point = fixed cost / contribution margin

Sales Prices: OM1: 4 OMR and OM2= 5 OMR in all areas.

Since the estimated sales of the Muscat division represented an unsatisfactory

Prepare a sales budget for the year to 31 December 2021.

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