Prestige U.s world-renowned management school offers MBA programs to three audiences: daytime students, evening students, and executives.

Prestige U.’s world-renowned management school offers MBA programs to three audiences: daytime students, evening students, and executives.

The school prides itself on student support, meaning that the students get numerous handouts each class. These handouts cover lecture outlines, assignments, suggested solutions, articles from the academic and practitioner press, and so on.

A different administrator operates each program. The administrator’s charge is to reduce the costs of operating the program while maintaining adequate quality. The following dispute has arisen over the allocation of the costs of the copy center: $24,000 + 0.03 cents per copy.

The following data are available:

Required:
a. Suppose all costs were allocated to the programs based on the actual number of students. Determine the cost allocated to each program.
b. Comment on the allocation in part (a). Suggest a superior driver, keeping in mind that the university wishes to use a single number (one rate) to charge out copy center costs.
c. How would you improve the allocation procedure to reflect the consumption of copy center resources by the various programs? Be sure to consider the drivers of fixed and variable costs in youranswer.

Transcribed Image Text:

Daytime Evenin Executive Total Most recent quarter # of copies # of students Long-term averag # of copies # of students 600,000 300 500,000 600 400,000 100 1,500,000 1,000 720,000450,000 500 330,000 100 1,500,000 1,000 400