Question: Jefferson County owns and operates an animal shelter that performs

Jefferson County owns and operates an animal shelter that performs three services: housing and finding homes for stray and unwanted animals, providing health care and neutering services for the animals, and pet training services. One facility is dedicated to housing animals waiting to be adopted. A second facility houses veterinarian services. A third facility houses the director, his staff, and several dog trainers. This facility also has several large meeting rooms that are frequently used for classes given by the animal trainers.
The trainers work with all of the animals to ensure that they are relatively easy to manage. They also provide dog obedience classes for adopting families. Estimated annual costs for the animal shelter and its services are as follows:
Director and staff salaries ....... \$ 60,000
Animal shelter employees’ salaries .... 100,000
Veterinarians and technicians ....... 150,000
Animal trainers ........... 40,000
Food and supplies .......... 125,000
Building-related costs .......... 200,000
On average, 75 animals per day are housed at the facility, or about 27,375 (75 x 365) animal days in total. The number of animals housed during the year totaled 4,500. In addition, the trainers offer about 125 classes during about 30 weeks throughout the year. On average, 10 families attend each class. Last year the veterinarian clinic experienced 5,000 animal visits.
One of the director’s staff members just graduated from an accounting program and would like to set up an ABC system for the shelter so that the director can better understand the cost for each of the shelter’s services.

He gathers the following information:
Square footage for each facility:
Animal shelter ........... 5,000 square feet
Director and training ........ 3,000 square feet
Veterinarian clinic ......... 2,000 square feet
Percentage of trainer time used in classes ... 50%
Supplies used for veterinarian services .... \$75,000

REQUIRED
A. Identify cost pools and assign costs to them, considering the three cost objects of interest.
B. Determine a cost driver for each cost pool and explain your choice.
C. Calculate the allocation rates for each cost pool and cost driver. Interpret the allocation rate for each cost pool (i.e., explain what it means).
D. Suppose that the director is concerned about an increase in number of adopted dogs returned to the shelter because of behavior problems. When dogs are returned, the shelter incurs extra animal intake and adoption costs, in addition to extra costs for board, room, and more training for the dogs. In addition, the director is concerned that adopting families may not want another dog because of their unhappy experience. The director views this as a quality problem and wants to improve quality in adoption services and reduce costs at the same time.
1. List the four types of quality activities presented in the chapter. What type of quality problem is the shelter experiencing? Explain your answer.
2. Will the current ABC system help managers determine costs for their quality activities? Explain.
3. List one new cost pool and cost driver that could be used to improve the director’s ability to analyze quality.

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