# Milwaukee Dairy Company produces cream, whole milk,and 2% milk. The joint cost costs of producing the threeproducts is SAR 30,000.

## Module 6

CRITICAL THINKING ASSIGNMENT (100 points):
Complete the following three questions using Microsoft Excel. No other submission format is allowed.
Review the grading rubric to confirm you are meeting the assignment requirements.

Problem 1
Milwaukee Dairy Company produces cream, whole milk,
and 2% milk. The joint cost costs of producing the three
products is SAR 30,000. The split-off quantities and
selling prices of each product are as follows:
Split-off
Quantity
(Gallons)
Price at
Split off
(SAR)
Cream 500 20.00
Whole milk 4,500 12.00
2% milk 1,000 6.00
Required: Calculate how much of the joint costs should be allocated to each product using the market
value at split off method.

Problem 2
The following information pertains to Delicious Bakery
Company:
GIVEN: Janitorial Cafeteria Mixing Baking
Dept. Dept. Dept. Dept.
Square feet 400 800 3000 2000
Number of
employees 10 20 60 100
Department
cost (SAR) 600,000
1,000,00
0
3,000,00
0
4,000,00
0
Required: Allocate Janitorial and Cafeteria department costs to mixing and baking departments using
the Direct method. Use square feet for allocating janitorial costs and number of employees for
allocating cafeteria department costs.

Problem 3
Maintenance
Hours
Maintenanc
e
Cost (SAR)
January 2,500 32,500
February 1,800 29,000
March 2,800 32,000
April 1,200 16,000
May 1,600 22,500
June 2,200 27,000
Required:
a. Calculate variable cost per unit using the high-low method.
b. Calculate fixed costs.
c. Calculate estimated costs at 2,700 maintenance hours.

Problem 4
Given the following:
Total (SAR)
Sales (40,000 units) 4,800,000
Variable expenses 2,880,000
Contribution margin 1,920,000
Fixed expenses 1,200,000
Net operating income 720,000
Required:
a. Calculate variable expense ratio
b. Calculate contribution margin ratio
c. Calculate break even sales in Units
d. Calculate break even sales in SAR
e. How many units must be sold to make a profit of 300,000 SAR?
Management is considering increasing quality of its units by spending SAR 5 more per unit in variable
costs and increasing advertising by SAR 80,000. Management believes these changes will increase unit
sales by 20% at the same price.
f. Calculate the new operating profit or loss.
g. Explain whether management should make the change and why or why not.
You must show all your work for credit

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