Accounting Question

Instruction attached, you may find solution online, but NO plagiarism and no AI..

Class Rules
This class has a ZERO tolerance policy of AI.
Ø The AI rate should be below 1%, check from:
https://gptzero.me
No argument of the AI similarity, I have already gave you the tool,
check yourself before upload.
https://copyleaks.com
The AI test result should be green and shows that it’s Human Language.
Ø The similarity of Turnitin.com should be below 7% from school
requirement.
Ø The AI % of Turnitin.com should be below 5% from school
requirement.
Instruction starts next page,
WWW.YORKVILLEU.CA
Case Analyses
•
•
Weight 5% of the final grade
Due no later than 11:00 p.m. on Sunday of Unit 3
Objectives [ULO 3.1 to ULO 3.5]
On successful completion of this assignment, students should be able to:
• Develop an ability to identify and assume an assigned role.
• Identify and rank the importance of explicit issues.
• Illustrate the importance of hidden (undirected) issues that arise from a detailed analysis.
• Identify accounting issues, assess their implications, generate alternatives, and provide
recommendations.
• Prepare a coherent report and integrated analysis that meets specific user needs.
Late Submission Policy
•
•
•
•
This assignment is subject to the Late Submission penalty policy, namely 5% per day, for three
days.
This page will close and will not allow further submissions after this Late Submission period has
expired.
In the event of an emergency situation preventing you from submitting within this time frame,
special permission must be obtained from your instructor. A documentation substantiating
emergency is required. In such a circumstance, if the extension is granted, the professor will
reopen the submission function for you on an individual basis.
Please do not email your submissions to your professor, either before or after the due date; all
coursework should be submitted through the online course (Moodle).
BUSI 1043 INTRODUCTION TO FINANCIAL ACCOUNTING
1
WWW.YORKVILLEU.CA
Case #1: Unit 3
Northern Community College (NCC) 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 NCC, Lynn Maple, 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 NCC tracks the direct costs of each program, which are shown below on an
annual basis, along with the number of full-time students:
Item
Full-time students
Professors’ salaries
Administrative salaries
Supplies
Teaching support
Facilities
Total Direct Costs
Professional Arts
Technology
Total
Studies
2,000
1,000
1,000
4,000
$1,260,000
$650,000
$780,000
$2,690,000
105,000
70,000
70,000
245,000
40,000
150,000
50,000
240,000
160,000
100,000
80,000
340,000
275,000
150,000
175,000
600,000
$1,840,000
$1,120,000
$1,155,000
$4,115,000
It is very important to understand the overhead costs consumed by each academic program at NCC in
determining the full cost of operating the programs. Central administration at NCC allocates financial resources
to academic programs based on the estimated full cost per student of delivering the program. The overhead
costs at NCC are significant, totaling over 60% of direct costs. Total annual overhead costs at NCC are as follows:
Administrative salaries
Facility costs
Office expenses
Total overhead costs
Cost
$900,000
1,300,000
300,000
$2,500,000
Traditionally, NCC has allocated overhead costs to academic programs on the basis of the number of full-time
students in each program. This approach was deemed appropriate since Maple reasoned that increasing the
number of students at NCC would result in higher overhead costs (e.g. more facilities would be needed, more
indirect support costs would be incurred, etc.). However, Maple is beginning to question the accuracy of the
traditional approach since it results in a similar full cost per student for the arts and technology programs, which
she feels doesn’t make sense. Based on her knowledge of the programs, Maple feels that the technology
program is probably more expensive to deliver than the arts program, but this does not come through in the
traditional costing approach.
BUSI 1043 INTRODUCTION TO FINANCIAL ACCOUNTING
2
WWW.YORKVILLEU.CA
Maple recently attended a seminar on management techniques being used by leading educational institutions
that, among other topics, covered the basics of the ABC approach. She likes the idea of being able to assign
indirect costs to academic programs on the basis of how much of the support activity resources are consumed
by each program. If Maple’s instincts are correct in that some programs consume more resources of certain
activities than others, this could have a significant impact on the overhead costs assigned to each under the ABC
approach.
Upon returning to NCC, Maple decides to implement ABC. She, along with the Assistant CFO, James West, begins
by identifying the key activities used to support the teaching programs. Rather than getting too detailed with
respect to identifying activities in the initial implementation, Maple decides to keep the process manageable
and comes up with six key activities. Next, base on a series of interviews with various NCC employees who work
in the departments covered by the identified activities, Maple and West estimate the percentage of the total
administrative, facility, and office expense resources consumed by each activity. Again, to keep the process
efficient, Maple rounds all percentages to the nearest 5%, figuring that a “close enough” approach will suffice
for this initial implementation and recognizing that the estimates are subjective to begin with. The results are
shown below:
Activity
Central administration
Information systems technology
Student counselling services
Human resources
Library operations
Registrar’s office
Total
Resource Distribution across Activities
Administrative
Facilities
Office
20%
5%
15%
20%
15%
15%
5%
5%
10%
10%
5%
10%
20%
60%
30%
25%
10%
20%
100%
100%
100%
Working with key personnel from each of the six activities shown above, Maple and West then identify the
activity measure and the quantity of that measure used for each teaching program. Fortunately, NCC
implemented an enterprise resource planning system a few years ago, which is already tracking much of the
information needed regarding the activity measures and the specific quantities for each academic program:
Activity
Central administration
Information systems
technology
Student counselling
services
Human resources
Library operations
Registrar’s office
Measure
Hours spent on program
Processing hours
Professional
6,000
6,000
Arts
7,000
3,000
Technology
7,000
12,000
Number of students
counselled
Number of admin. Staff
and faculty members
Number of library
circulations
Full-time students
180
115
205
21
15
14
6,000
3,000
3,000
2,000
1,000
1,000
Required:
1. Using the traditional approach to assigning overhead costs to academic programs:
BUSI 1043 INTRODUCTION TO FINANCIAL ACCOUNTING
3
WWW.YORKVILLEU.CA
a. Calculate the predetermined overhead rate.
b. Assign the overhead costs to each academic program using the predetermined rate.
c. Calculate the total cost per student (direct costs plus overhead) of operating each
academic program.
2. Using ABC, complete the following requirements:
a. Complete the first-stage allocation of overhead costs to academic programs.
b. Calculate the activity rates for each of the activity cost pools.
c. Using the activity rates calculated in (b), complete the second-stage allocation of overhead
to academic programs.
3. Based on the results of (2), calculate the total cost per student (direct costs plus overhead) of
operating each academic program.
4. Draft a memo to Maple explaining the key reasons for differences in the total cost per student of
operating each academic program that arise between traditional costing approach and ABC.
Activity/Competencies Demonstrated
1.
Identification and Analysis of Issues (70%)
Issue 1: Using the traditional approach to assigning overhead costs
to academic programs:
a.
Calculate the predetermined overhead rate.
b.
Assign the overhead costs to each academic program
using the predetermined rate.
c.
Calculate the total cost per student (direct costs plus
overhead) of operating each academic program.
Issue 2a: Using ABC, complete the following requirements:
2.
3.
% of
Final
Grade
a.
Complete the first-stage allocation of overhead costs
to academic programs.
b.
Calculate the activity rates for each of the activity
cost pools.
c.
Using the activity rates calculated in (b), complete
the second-stage allocation of overhead to academic
programs.
Issue 3: Based on the results of (2), calculate the total cost per
student (direct costs plus overhead) of operating each academic
program.
Recommendation/Issue #4: Draft a memo to Maple explaining the
key reasons for differences in the total cost per student of
operating each academic program that arise between traditional
costing approach and ABC. (10%)
Attention to Detail (10%)
BUSI 1043 INTRODUCTION TO FINANCIAL ACCOUNTING
/20
/40
/10
/20
4
WWW.YORKVILLEU.CA
a. Spelling, grammar, and formatting
Total
BUSI 1043 INTRODUCTION TO FINANCIAL ACCOUNTING
/10
/100
5