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Homework answers / question archive / Capital University, a mid-size university located in a capital city has approximately 10,000 students studying in four departments

Capital University, a mid-size university located in a capital city has approximately 10,000 students studying in four departments

Accounting

Capital University, a mid-size university located in a capital city has approximately 10,000 students studying in four departments.  While the University’s goal is not to make a profit, it is also important that the University does not operate at a loss.  The only source of revenue is tuition and government grants.  The government gives the University $14,000 a year for each full-time student.

Faculty:

Arts

Science

Engineering

Business

Number of Courses

120

200

150

150

Number of Students

4,800

2,000

600

2,700

Other Information:

  • Each Course is only offered once each year
  • Each student is enrolled in 10 classes per year
  • Each faculty member is paid $120,000 per year and teaches 6 courses per year
  • Total student support costs are $139,992,700 per year.  These cost include student services and administration.  Each student generally requires an equal amount of support.
  • Building costs are $12,400,000 per year.  Costs are equal for each class.
  • Other costs $17,000,000 (Science labs $10million, Business trading room $2million, Engineering labs $5million).

REQUIRED

  1. The Dean has asked you to use this information to determine how much tuition should be charged assuming the same amount of tuition should be charged to each student and the University breaks even.
  2. Using Activity Based Costing, calculate how much tuition should be charged to students in each faculty.

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n this question

  1. not earn ??????profit and not earn loss means Break even point
  2. only source of revenue is as follow
  • Govt grant in this question given $14000
  • tution fees ? ( required calculate )

3. Clculation of cost incured in a year

IN A SUMMARRY WAY HOW SOLVE THIS QUESTION

BREAK EVEN POINT = REVENUE - VARIABLE COST -FIXED COST

IN THIS CONTEXT THIS QUESTION

COST INCURRED - TUTION FEES +TUTION FEES( REVENUE FROM STUDENT )

SOLUTION

1.

COST INCURRED

  1. Faculty member paid

total cources 120+200+150+150*120000/6 = 12,400,000

  1. Total student support cost = 139,992,700
  2. Building cost = 12,400,000
  3. Other cost = 17,000,000

TOTAL COST = 181,792,700

2. Revenue

total cources* no of student/10

120*4800+200*2000+150*600+150*2700 = 1471000

Total cost = 181,792,700

Govt grant = 14,000

that means revenue = 181792700-14000=181778700

per student cost of course = 181778700/1471000 = $1289.2106

per student cost of class = 181778700/1471000*10 = $128.92106

As per activity based costing

COST INCURRED

  1. Faculty member paid

total cources 120+200+150+150*120000/6 = 12,400,000 (divide in no of cource )

  1. Total student support cost = 139,992,700 (divide in no of cource )
  2. Building cost = 12,400,000 (divide in no of cource )
  3. Other cost = 17,000,000 (actully incurred)
 

Arts

Science

Engineering

Business

particular Arts science engineering business

Faculty member paid 2,400,000 4000000 3,000,000   3,000,000

Total student support cost 27,095361 45,158,935 33,869,202   33,869,202

Building cost    2,400,000 4000000 3,000,000   3,000,000

Other cost -- 10,000,000 5,000,000      2,000,000

total cost 31,895,361 63,158,935 44,869,202 41,869,202

as per this calculate faculty cost devide propotionately in 576000:400000:90000:405000 per cource per student cost

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