cost accounting, discussion board help

timer Asked: Apr 16th, 2017
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Question description

Central State College (CSC) is a state-supported college with a large business school. The business school offers an undergraduate degree and training programs for a local manufacturer. The state does not support the training programs, which are paid for by the manufacturer under a fixed-price contract. The college president has asked the dean of the business school for a breakdown of costs by program. The president will be meeting with state legislators asking for an increase in support for the college’s programs. The dean has assigned you to lead the team that will develop the costs by program. The business school’s computer lab is a major cost item. The lab is used during the day for the undergraduate program and in the evening for the training program.


a. How will you recommend that the cost of the computer lab be allocated to the two programs? Be explicit in your description of the allocation base.

b. The dean tells you that the training program should not be allocated any costs other than its direct costs. She points out that the college was established for undergraduate education and the training program is an incremental activity. “After all, if we didn’t have the training program, we would still have the computer lab,” she says. Do you agree with the dean? Is the dean’s suggestion ethical?

Tutor Answer

tutor cess
School: University of Virginia

Part 1 Solution The costs can be allocated to the college and company according to the duration of time in hours spent by the students from the college and students from the company. If both groups of students use equal time in the lab, the cost should be split on an even basis between the two groups. However, the daytime users are bound to use more time than the night users. As a result, costs should be apportioned appropriately based on time spent in the computer lab. The computer lab costs can also be allocated based on student number. If the undergraduate students using the computer lab are more in numbers compared to company workers, the largest share of costs should go to the college while the company takes the remaining proportion. A third approach is the number of classes held in the lab. Again, the group that reports the highest number of activity using...

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Good stuff. Would use again.

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