9:53 AM a maryville.instructure.com ·\'11 Verizon? 94% Week 5: Why does it Matte
ID: 2436520 • Letter: 9
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9:53 AM a maryville.instructure.com ·'11 Verizon? 94% Week 5: Why does it Matter Cost Information Imagine a International University that is trying to decide whether or not to close its business school. Of the costs to the business school, 55% are allocated administrative costs. Account . It allocates all administrative costs based upon the number of credit hours students take in the school. . It bases revenue on the same number of credit hours taken. . When it uses this method, the business school looks Courses very unprofitable. The business school uses traditional classrooms as all students are required to have a PC laptop with Excel. Business school classes use no special equipment, have not special faculty requirements, are in a old building, require no special advertising nor recruiting Inbox 1. What costs should the university consider? Be sure to identify the costs as Direct, Indirect, Fixed, Variable etc. 2. How does the cost allocation method impact the way the university sees the business school? Answer the prompt and respond to at least one of your peers posts. You must make an initial post before you are able to view the posts of your peers. To view the discussion board rubric, click the gear icon in the upper right corner and select Show Rubric." Search entries or author Unread Reply Replies are only visible to those who have posted at least one reply Ik-Explanation / Answer
University should consider following cost for the school:
Direct: Teaching staff salary
Indirect: Cleaning staff salary of whole university premise
Fixed Cost: insurance charges of the premise, rent if any paid
Variable: Electricty expenses
Part 2
University insteado allocating administrative costs on random basis should allocate costs which are direct to the business school. Currently, administrative costs which university incurs as a whole for the other colleges also is being allocated. It can be safetly assumed here that in other colleges of the university, facilities like better equiped labs and classroms are provided which have much higher administrative costs than what business school actually incurs. Thus cost should be distributed as per either ABC or what school actually incurs rather than current system to see the real profit generated.
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