Using the cost information provided by the library, the budget committee computed a unit cost per book of $$18\mathrm{.}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\mathrm{.}40$

RFID tag per book $$\mathrm{.}50$

Total unit cost $$18\mathrm{.}90$

The committee has since denied the request for additional funds and expressed the following sentiments$.$First$,$ the unit cost of $$18\mathrm{.}90$ per donated book is already too high; an additional $$5,000$ per year would bring the cost per book to $$23\mathrm{.}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\mathrm{.}40$

RFID tag per book $$\mathrm{.}50$

Total unit cost $$23\mathrm{.}90$

$$Second$,$ at the already$-$high cost of $$18\mathrm{.}90$ per book, the library can hardly afford to accept more than $1,000$ books per year; if$,$ for instance, the library were to accept $2,000$ books, it would cost the university $$37,800.$ Finally, we have serious doubts as to the value of the donations department; if it were eliminated entirely, the university could save, at the very least $$23,900$ per year. These savings could be used to support some other, more worthwhile function within the library.$$

Librarian salary allocation $$12,000$

Graduate assistant stipend $$5,200$

Facility cost allocation $$1,200$

Part$-$time student help $$5,000$

RFID tags $($$$\mathrm{.}501,000$ books$)$

$3.$ Cost Analysis: $(3)$

a$.$ Identify each cost associated with the library$$s book donations department.

b$.$ Classify each cost associated with the library$$s book donations department as fixed or variable within the relevant range of activity you identified above. Justify your classifications. Would your classifications change if the book donations department$$s activity moved outside the relevant range of activity you identified above? Explain.

c$.$ Classify each cost associated with the library$$s 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 department$$s request for additional funds.