Question

The University of Dental Health (UDH) is a state-run university focusing on the education and training of dentists, dental assistants, dental hygienists, and other dental professionals. The university provides both traditional undergraduate courses to 9,000 students and continuing professional education (CPE) courses to 6,000 practicing professionals. UDH has just hired a new controller who wants to utilize ABC. The controller has identified three key activities performed by the university and the cost of each of these activities:

• UDH has 3 buildings with a total of 150,000 square feet of classroom and facility space. Due to the large space requirements for labs and other training facilities, the undergraduate program utilizes 127,500 square feet. Total cost, $1,650,000.
• UDH offers career placement services for undergraduate students, career counseling for active professionals taking CPE courses, and other student services to both groups. Total cost, $420,000.
• UDH offers 1,500 different instructional courses each year, 975 of which are undergraduate courses. Total cost, $3,450,000.

Required:
1. Compute an activity rate for each of the three activities identified by the controller.
2. Compute cost driver values and activity proportions for each group of students for each activity.
3. Determine the amount of costs assigned to each group of students and the cost per student to UDH to provide these three key activities.

Answer 1

Activity Rate = Estimated Overheads/Estimated Driver
Cost Pool	Overheads	Driver	Rate
Space	1,650,000.00	150,000.00	11.00	per square feet
Career Placement	420,000.00	15,000.00	28.00	per student
Instructional Courses	3,450,000.00	1,500.00	2,300.00	per course
	Undergraduate	CPE
Square Feet	127,500.00	22,500.00
Students	9,000.00	6,000.00
Instructional courses	975.00	525.00
Cost Assigned
	Undergraduate	CPE
Space	1,402,500.00	247,500.00
Career Placement	252,000.00	168,000.00
Instructional Courses	2,242,500.00	1,207,500.00
Total cost	3,897,000.00	1,623,000.00
Cost per student	433.00	270.50

В. LCD E 1 Activity Rate = Estimated Overheads/Estimated Driver 2 Cost Pool 3 Space 4. Career Placement 5 Instructional Courses Overheads 1650000 420000 3450000 Driver 150000 =9000+6000 1500 Rate =B3/C3 per square feet =B4/C4 per student =B5/C5 per course 6 1 8 Square Feet 9 Students 10 Instructional courses Undergraduate CPE 127500 = 150000-B8 9000 6000 975 = 1500-B10 11 12 Cost Assigned 13 14 Space 15 Career Placement 16 Instructional Courses 17 Total cost 18 Cost per student Undergraduate CPE =B8*$D3 =C8*$D3 =B9*$D4 =C9*$D4 =B10*$D5 =C10*$D5 =SUM(B14:B16) =SUM(C14:C16) =B17/9000 =C17/6000