JAZEERA UNIVERSITY

Faculty of Business and Economics

Management Accounting
1. Suppose that the XYZ corporation target capital structure as
follow:
Wd =0.35, Wp = 0.20, We = 0.45
The before tax-cost of debt is 9%, its cost of equity is 11%, its
cost of preferred stock is 8% and it marginal tax rate is 20% .
Compute XYZs WACC?

2. Geedi is applying for loans to help fund his dream of

building an indoor skate rink. Geedi 's bank asks for his
balance sheet so they can analysis his current debt levels.
According to Geedi 's balance sheet he reported $400,000 of
current liabilities and only $55,000 of current assets.
Required
a) How Geedi 's current ratio would be calculate?
b) give comment for the decision of the bank?

3. The total value of Mubarak company is 50 million and

company wants to raise money, the company have $ 30
million of common stock, the expected return is 35%. The
company has $10 in preferred stock at rate of 15%.
Moreover the company will issue $ 10 million of debt, the
cost of debt is 11% and the tax rate is 8% compute the
WACC of Mubarak Company.

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 JAZEERA UNIVERSITY
Faculty of Business and Economics
Management Accounting
4. The Mascuud Company reported the following results for
previous week:
⁻ Sales $ 670,000
⁻ Cost Of Goods Sold 321,000
⁻ Gross Margin 349,000
⁻ Selling And Admin. Expenses 110,000
⁻ Operating Income 239,000
⁻ Operating Asset at the begging of the week were $366,000
and the end Of the of the week they were 433,000

Required:
1. Calculate Average Operating Assets
2. Calculate Margin
3. Calculate Turnover
4. Calculate Return on investment

5. A Company estimates that the fixed cost of producing a line

of T-shirt is $102,000 with a $100 variable cost for each pair
produced. They want to know:
Required:
⁻ If each pair sells for $45, How many pairs must they sell to
break-even?
⁻ If they sell 100,000 pairs at $45 each, how much money will
they make?

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 JAZEERA UNIVERSITY
Faculty of Business and Economics
Management Accounting
6. The Horyaal Company reported the following results for
previous week:
⁻ Sales $ 670,000
⁻ Cost Of Goods Sold 321,000
⁻ Gross Margin 349,000
⁻ Selling And Admin. Expenses 110,000
⁻ Operating Income 239,000
⁻ Operating Asset at the begging of the week were $366,000
and the end Of the of the week they were 433,000
⁻ The Company requires a minimum rate of return of 14%

Required:
1. Calculate The Residual Income?

7. The Nasiib Company reported the following results for

previous week:
⁻ Sales $ 670,000
⁻ Cost Of Goods Sold 321,000
⁻ Gross Margin 349,000
⁻ Selling And Admin. Expenses 110,000
⁻ Operating Income $ 239,000
⁻ Less: income Taxes (@ 20%) 47,800
⁻ The total Capital Employed Equal $ 600,000 and actual cost
of capital is 20%
Required:
1. Calculate the Net income
2. Calculate The Economic Value Added?
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 JAZEERA UNIVERSITY
Faculty of Business and Economics
Management Accounting
8. Daiman Furniture Company sells industrial furniture for
office buildings. During the current year 2018, Daiman
reported cost of goods sold on its income statement of
$2,000,000. Donny's beginning inventory was $4,000,000
and its ending inventory was $5,000,000.
Required:
1. How would you calculate the inventory turnover ratio of
Daiman Furniture Company?
2. Make Comment the ability of the company of generating
incom?

9. Baaburaqiis is a retail store that sells staff food . Baaburaqiis

offers accounts to all of his main customers. At the end of
the year, Baaburaqiis 's balance sheet shows $30,000 in
accounts receivable, $85,000 of gross credit sales, and
$35,000 of returns. Last year's balance sheet showed
$20,000 of accounts receivable.

Required
1. How would you calculate the Account receivable turnover
ratio of Baaburaqiis retail store?
2. Make Comment on the ability of the company for collecting
its accounts ?

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 JAZEERA UNIVERSITY
Faculty of Business and Economics
Management Accounting
10. Assume Qurxiye's Clothing Store spent $200,000 on
inventory for the year. Qurxiye was able to sell this inventory
for $600,000. Unfortunately, $50,000 of the sales were
returned by customers and refunded.
Required
1. How would you calculate the Gross margin ratio of Qurxiye
clothing store?
2. Make Comment on the ability of the company for collecting
its accounts ?

11. ABC Company planning to sell 2,000 chairs for the first
quarter. Desired ending inventory is 200 chairs and
beginning inventory is 300 chairs.
Required
1. How many chairs need to be produced during this quarter?
12. ABC Company planning to sell 1,320 shoes in sales
units for the first quarter. And Price per Unit is $91
Required
1. Get the Sales Budget of ABC Company?

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 JAZEERA UNIVERSITY
Faculty of Business and Economics
Management Accounting
13. Xushmeeye Electronics is a Mobile store that selling
phones and its equipment’s to the customers. Last year
Xushmeeye had the best year in sales it has ever had since it
opened the business . Last year Xushmeeye's net sales were
$2,000,000 and her net income was $200,000.
Required
1. How would you calculate the Profit margin ratio of
Xushmeeye Electronics?