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 11,050 students and continuing professional education (CPE) courses to 5,950 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 170,000 square feet of classroom and facility space. Due to the large space requirements for labs and other training facilities, the undergraduate program utilizes 153,000 square feet. Total cost, $1,904,000.
• 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, $510,000.
• UDH offers 1,400 different instructional courses each year, 980 of which are undergraduate courses. Total cost, $3,500,000.

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

Answers

--[1]

Activity	Activity Cost driver	Cost	Total Activity Driver	Activity Rate
Facilities	No. of sq ft	$1,904,000	170,000	$                               11.20
Services	No. of students	$510,000	17,000	$                               30.00
Instructions	No. of courses	$3,500,000	1,400	$                         2,500.00

--[2]

	Activity Cost driver	Cost	Undergraduate	Activity Proportion	CPE	Activity Proportion	Total	Total Proportion
Facilities	No. of sq ft	$1,904,000	153000	90%	17000	10%	170000	100%
Services	No. of students	$510,000	11050	65%	5950	35%	17000	100%
Instructions	No. of courses	$3,500,000	980	70%	420	30%	1400	100%

--[3]

Activity		Cost	Undergraduate	CPE
Facilities	No. of sq ft	$1,904,000	$1,713,600	$190,400
Services	No. of students	$510,000	$331,500	$178,500
Instructions	No. of courses	$3,500,000	$2,450,000	$1,050,000
Total Cost assigned			$4,495,100	$1,418,900
No. of students			11,050	5,950
Cost per students			$                              406.80	$                            238.47