Vernon Academy is a profit-oriented education business. Vernon provides remedial training for high school students who...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Vernon Academy is a profit-oriented education business. Vernon provides remedial training for high school students who have fallen behind in their classroom studies. It charges its students $1,370 per course. During the previous year, Vernon provided Instruction for 1,000 students. The income statement for the company follows: Revenue Cost of instructors Overhead costs Net income $ 1,370,000 (930,000) (382,500) $ 57,500 The company president, Andria Rossi, Indicated in a discussion with the accountant, Sam Trent, that she was extremely pleased with the growth in the area of computer-assisted Instruction. She observed that this department served 300 students using only three part- time instructors. In contrast, the classroom-based Instructional department required 28 Instructors to teach 700 students. Ms. Rossi noted that the per-student cost of Instruction was dramatically lower for the computer-assisted department. She based her conclusion on the following Information: Vernon pays its part-time Instructors an average of $30,000 per year. The total cost of Instruction and the cost per student are computed as follows: Type of Instruction Number of instructors (a) Number of students (b) Total cost (c = ax $30,000) Cost per student (c + b) Computer-Assisted Classroom 3 300 28 700 $ 90,000 $ 300 $ 840,000 $ 1,200 Assuming that overhead costs were distributed equally across the student population, Ms. Rossi concluded that the cost of Instructors was the critical variable in the company's capacity to generate profits. Based on her analysis, her strategic plan called for heavily Increased use of computer-assisted Instruction. Mr. Trent was not so sure that computer-assisted Instruction should be stressed. After attending a seminar on activity-based costing (ABC), he believed that the allocation of overhead cost could be more closely traced to the different types of learning activities. To facilitate an activity-based analysis, he developed the following Information about the costs associated with computer-assisted versus classroom Instructional activities. He identified $300,000 of overhead costs that were directly traceable to computer-assisted activities, including the costs of computer hardware, software, and technical assistance. He believed the remaining $82,500 of overhead costs should be allocated to the two Instructional activities based on the number of students enrolled in each program. Required a. Based on the preceding Information, determine the total cost and the cost per student to provide courses through computer- assisted Instruction versus classroom Instruction. (Do not round intermediate calculations. Round "Cost per student" to 2 decimal places.) Type of Instruction Total cost Cost per student Computer- Assisted Classroom Vernon Academy is a profit-oriented education business. Vernon provides remedial training for high school students who have fallen behind in their classroom studies. It charges its students $1,370 per course. During the previous year, Vernon provided Instruction for 1,000 students. The income statement for the company follows: Revenue Cost of instructors Overhead costs Net income $ 1,370,000 (930,000) (382,500) $ 57,500 The company president, Andria Rossi, Indicated in a discussion with the accountant, Sam Trent, that she was extremely pleased with the growth in the area of computer-assisted Instruction. She observed that this department served 300 students using only three part- time instructors. In contrast, the classroom-based Instructional department required 28 Instructors to teach 700 students. Ms. Rossi noted that the per-student cost of Instruction was dramatically lower for the computer-assisted department. She based her conclusion on the following Information: Vernon pays its part-time Instructors an average of $30,000 per year. The total cost of Instruction and the cost per student are computed as follows: Type of Instruction Number of instructors (a) Number of students (b) Total cost (c = ax $30,000) Cost per student (c + b) Computer-Assisted Classroom 3 300 28 700 $ 90,000 $ 300 $ 840,000 $ 1,200 Assuming that overhead costs were distributed equally across the student population, Ms. Rossi concluded that the cost of Instructors was the critical variable in the company's capacity to generate profits. Based on her analysis, her strategic plan called for heavily Increased use of computer-assisted Instruction. Mr. Trent was not so sure that computer-assisted Instruction should be stressed. After attending a seminar on activity-based costing (ABC), he believed that the allocation of overhead cost could be more closely traced to the different types of learning activities. To facilitate an activity-based analysis, he developed the following Information about the costs associated with computer-assisted versus classroom Instructional activities. He identified $300,000 of overhead costs that were directly traceable to computer-assisted activities, including the costs of computer hardware, software, and technical assistance. He believed the remaining $82,500 of overhead costs should be allocated to the two Instructional activities based on the number of students enrolled in each program. Required a. Based on the preceding Information, determine the total cost and the cost per student to provide courses through computer- assisted Instruction versus classroom Instruction. (Do not round intermediate calculations. Round "Cost per student" to 2 decimal places.) Type of Instruction Total cost Cost per student Computer- Assisted Classroom
Expert Answer:
Related Book For
Fundamental Managerial Accounting Concepts
ISBN: 978-0078025655
7th edition
Authors: Thomas Edmonds, Christopher Edmonds, Bor Yi Tsay, Philip Old
Posted Date:
Students also viewed these accounting questions
-
Hot Dee is a hot sauce producer. The demand forecast for the next four weeks, unit production, and inventory holding costs are given in the table below. Currently, there are 500 bottles on-hand. Due...
-
Apple Academy is a profit-oriented education business. Apple provides remedial training for high school students who have fallen behind in their classroom studies. It charges its students $750 per...
-
The Shannon Township Debt Service Fund accumulates resources to pay its $2 million general obligation debt. The debt is payable in equal annual installments of principal over 10 years with 5%...
-
How might your preference for various benefits change as you grow older or as your family situation changes?
-
1. Find the area of the following region. 1 (a) The region bounded between y = sec x, y = -4sin x, x =- and x = 3' (b) The region in the first quadrant bounded by y = x, y = x and below y = 1. [Hint:...
-
What are the pros and cons of measuring and trending demodulated spectra?
-
Hugh Leach Corp., a producer of machine tools, wants to move to a larger site. Two alternative locations have been identified: Bonham and McKinney. Bonham would have fixed costs of $800,000 per year...
-
Describe a situation situation where physical agents pose a potential hazard? What agents are present? How do these agents pose hazards? What steps have been taken to control the physical agents and...
-
Describe a verified truth you arrived at based on an insight derived from experience. I.e . , how you used Lonergan's operations of consciousness. Show your work. How did this affect your judgment...
-
5. The following data refer to the eye of a single-sided impeller: Inner Radius Outer Radius Mass flow rate Ambient conditions Rotational speed 6.50 cm 15.0 cm 8 kg/s 101.325 kPa, 288K 270 rev/sec...
-
1. Appliance Possible, Inc. (AP) is a manufacturer of toaster ovens. The following data are available for AP's expected costs at production levels of 100,000 units. Ap's tax rate is 40%. Variable...
-
(a) Solve the following systems of linear equations and determine whether the system is consistent or inconsistent: i. ii. iii. I + 13 =y = 3x 5263 2.5x+0.75 3y = 0 1.6x = 1.08 1.2y - I +== 7 30 2-r...
-
The following variable production costs apply to goods made by Franklin Manufacturing Corporation: Cost per Unit Item Materials Labor Variable overhead Total $9.00 4.00 1.20 $14.20 Required Determine...
-
Rooney Manufacturing Company began operations on January 1. During the year, it started and completed 1,650 units of product. The financial statements are prepared in accordance with GAAP. The...
-
Describe at least three anticompetitive business practices that a MNC would engage in once it enters a foreign country.
-
In Exercises discuss the continuity of each function. f(x) -3 1 x - 4 y 3 2 -1 -2 -3+ 3 X
-
There is usually no problem with the valuation of receivables because it is clear how much is legally owed to an entity. Discuss.
-
Under IAS 37, a provision for doubtful receivables is not a provision. A. True. B. False.
-
All credit balances included in a balance sheet are either capital and reserves or liabilities, actual or estimated. Discuss.
Study smarter with the SolutionInn App