(20 points) Cost Analysis: a. Identify each cost associated with the librarys book donations department. b. Classify each cost associated with the librarys book donations department as fixed or variable within the relevant range of activity you identified above. Justify your classifications. Would your classifications change if the book donations departments activity moved outside the relevant range of activity you identified above? Explain. c. Classify each cost associated with the librarys book donations department as direct or indirect, assuming that the cost object of interest is the book donations department as a whole. Justify your classifications. Would your classifications change if you were to assume that the cost object of interest were an individual book processed? Explain. d. Explain how the analysis of cost behavior and cost traceability is relevant to the analysis of the book donations departments request for additional funds.

Using the cost information provided by the library, the budget committee computed a unit cost per book of $18.90, calculated as follows:

Librarian salary allocation $12,000

Graduate assistant stipend $5,200

Facility cost allocation $1,200

Total costs $18,400

Per book (based on 1,000 books) $18.40

RFID tag per book $.50

Total unit cost $18.90

The committee has since denied the request for additional funds and expressed the following sentiments. First, the unit cost of $18.90 per donated book is already too high; an additional $5,000 per year would bring the cost per book to $23.90 per book, an entirely unacceptable cost for the processing of an old used book.

Librarian salary allocation $12,000

Graduate assistant stipend $5,200

Facility cost allocation $1,200

Part-time student help $5,000

Total costs $23,400

Per book (based on 1,000 books) $23.40

RFID tag per book $.50

Total unit cost $23.90