Question

Α. D ΕΕ ADC UTUP AS Tent Kolbec Community College (KCC) has 4,000 full-time students and offers a variety of academic programs in three areas: professional studies, arts, and technology. The professional studies programs prepare students for administrative and clerical jobs in a variety of professional settings, including accounting, medicine, and law. The arts program's offerings are wide ranging and include graphic design, digital animation, culinary arts, cosmetology, and music arts. The technology programs are also varied, including information technology, medical laboratory technology, electrical engineering technology, pharmacy technology, and natural resources technology. The chief financial officer of KCC, Lynn Jones, has consistently emphasized to other members of the senior management team the importance of understanding the costs of delivering the various academic programs. To that end, the costing system used at KCC tracks the direct costs of each program, which are shown below on an annual basis, along with the number of fulltime students: Item Full-Time Students Professional Studies 2,000 Arts 1,000 Technology 1,000 Total 4,000 $ Professor's salaries Administrative salaries Supplies Teaching support Facilities Total direct cost 1,270,000 $ 107,000 42,000 162,000 279,000 1,860,000 $ 654,000 71,000 152,000 101,000 152,000 1,130,000 $ 784,000 $ 71,000 51,000 82,000 177,000 $ 1,165,000 $ 2,708,000 249,000 245,000 345,000 608,000 4,155,000 $ ABC Question Req. 1 Req. 2 Req. 3 +

Answer 1

Traditional Approach Total Overhead Cost = $2,520,000 Total Number of Students = 4,000 students Overhead allocation Rate = $2,520,000 / 4,000 = $630 per student Arts Professional Studies 2,000 Total Technology 1,000 Full-time Students 1,000 4,000 Professor's Salary Administrative salaries Supplies Teaching Support Facilities Total Direct Cost $ $ $ $ $ $ 12,70,000 $ 1,07,000 $ 42,000 $ 1,62,000 $ 2,79,000 $ 18,60,000 $ 6,54,000$ 71,000 $ 1,52,000 $ 1,01,000$ 1,52,000 $ 11,30,000 $ 7,84,000 $ 71,000 $ 51,000 $ 82,000 $ 1,77,000$ 11,65,000 $ 27,08,000 2,49,000 2,45,000 3,45,000 6,08,000 41,55,000 Allocated Overhead Cost $ 12,60,000 $ 6,30,000 $ 6,30,000 $ 25,20,000 Total Cost $ 31,20,000 $ 17,60,000 $ 17,95,000 $ 66,75,000

ABC Costing Distribution of Cost based on Activity Related Expenditure Administrative Facilities $ 9,10,000.00 $ 13,10,000.00 Office Total $ 3,00,000.00 $ 25,20,000.00 Central Administration Information System Technology Student Councelling Services Human Resources Library Operations Registrar's Ofice $ 1,82,000.00 $ 65,500.00 $ 60,000.00 $ 3,07,500.00 $ 1,82,000.00 $ 1,96,500.00 $ 60,000.00 $ 4,38,500.00 $ 45,500.00 $ 65,500.00 $ 15,000.00 $ 1,26,000.00 $ 91.000.00S 65.500.00 $ 15,000.00 $ 1.71.500.00 $ 1,82,000.00 $ 8,51,500.00 $ 1,05,000.00 $ 11,38,500.00 $ 2,27,500.00 $ 65,500.00 $ 45,000.00 $ 3,38,000.00 Total $ 9,10,000.00 $ 13,10,000.00 $ 3,00,000.00 Calculation of activity rates Activity Level of Acivity Activity rate Central Administration 25,000 $ 12.30 Amount Measure Hours spend on $ 3,07,500.00 program Processing $ 4,38,500.00 Hours Number of students $ 1,26,000.00 counceled Information System Technology 20,000 $ 21.93 Student Councelling Services 500 $ 252.00 Human Resources 50$ 3,430.00 Number of $ 1,71,500.00 faculty members Number of library $ 11,38,500.00 circulation fulltime $ 3,38,000.00 students Library Operations 11,000 $ 103.50 Registrar's Ofice 4,000 $ 84.50 Arts Total Professional Studies 2,000 Technology 1,000 Full-time Students 1,000 4,000 Professor's Salary Administrative salaries Supplies Teaching Support Facilities Total Direct Cost $ 12,70,000.00 $ 6,54,000.00 $ 7,84,000.00 $ 27,08,000.00 $ 1,07,000.00 $ 71,000.00 $ 71,000.00 $ 2,49,000.00 $ 42,000.00 $ 1,52,000.00 $ 51,000.00 $ 2,45,000.00 $ 1,62,000.00 $ 1,01,000.00 $ 82,000.00 $ 3,45,000.00 $ 2,79,000.00 $ 1,52,000.00 $ 1,77,000.00 $ 6,08,000.00 $ 18,60,000.00 $ 11,30,000.00 $ 11,65,000.00 $ 41,55,000.00 Allocation of Overheads Central Administration Information System Technology Student Councelling Services Human Resources Library Operations Registrar's Ofice Total Allocated Overheads $ 92,250.00 $ 1,07,625.00 $ 1,07,625.00 $ 3,07,500.00 $ 1,27,165.00 $ 59,197.50 $ 2,52,137.50 $ 4,38,500.00 $ 45,360.00 $ 28,980.00 $ 51,660.00 $ 1,26,000.00 $ 72,030.00 $ 51,450.00 $ 48,020.00 $ 1,71,500.00 $ 5,69,250.00 $ 2,84,625.00 $ 2,84,625.00 $ 11,38,500.00 $ 1,69,000.00 $ 84,500.00 $ 84,500.00 $ 3,38,000.00 $ 10,75,055.00 $ 6,16,377.50 $ 8,28,567.50 $ 25,20,000.00 Total Cost $ 29,35,055.00 $ 17,46,377.50 $ 19,93,567.50 $ 66,75,000.00

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