CompuTrain Learning Centre delivers two services, IT training and Office training, in the same location. Last month, the centre experienced the following costs and results:
The IT training manager felt that his line of business was overcharged due to the overhead allocation based on the direct labour cost. He approached the cost accounting department for help in understanding activity-based costing. His specific request was that ABC be applied to see whether the average cost per student is significantly changed. The following additional information is extracted from the accounting records for the month:
¢ The overhead cost for registration was $10,000. The cost driver is the number of students registered.
¢ The overhead cost for computer depreciation was $36,000. The cost driver is hours of use. The computers were used 1,400 hours for IT training and 1,000 hours for office training.
¢ The overhead cost for rent was $26,000. The cost driver for this cost is classroom utilization. Sixteen classrooms were for IT training and 10 classrooms were for office training.
REQUIRED
A. Assign the overhead cost to each type of training using ABC.
B. Determine the average cost per student for the two types of training using direct materials, direct labour, and overhead allocated under ABC.
C. Compare and explain the average cost per student under ABC to the average cost per student found in the data section of this problem
Enjoy 24/7 customer support for any queries or concerns you have.
Phone: +1 213 3772458
Email: support@gradeessays.com