Mementos Academy is assessing whether to outsource its student enrolment processes. The general process followed by staff in the enrolment office is to first validate students’ prior academic record (e.g., secondary school results) and send an offer of enrolment, provide degree advice and enter students’ study program details into the student record system, and collect fees. The following table shows the costs associated with these three processes: Cost Validation Student records Fees collection Staff salaries 70,400 43,900 39,700 Data processing 9,200 32,500 7,900 Telephone 1,700 4,600 3,000 Postage - 1,500 4,000 Consumables 3,700 45,900 11,800 Electricity 1,600 3,100 3,000 Equipment depreciation 12,200 35,800 31,900 Insurance 1,600 3,300 2,600 The academy processes an average of 14,000 student enrolments each year. Required: Apply process costing to calculate the total cost per student enrolment. Discuss whether the total cost per student enrolment calculated in (a) provide a reliable estimate of the costs incurred to process each enrolment? Exercise #3 Velvet Ltd provides legal services and has firms across the Asia-Pacific. It adopts a job costing system, where direct costs are charged to individual clients and indirect costs are charged to jobs using a predetermined overhead rate. Velvet Ltd uses direct cost as the allocation base. Igor, Velvet Ltd’s management accountant, anticipates the following costs for the upcoming year. Cost Percentage of direct costs Professional staff salary 3,200,000 95% Administrative staff salary 370,000 60% Rent and insurance expenses 630,000 0% Utilities expenses 310,000 0% Law Society membership 120,000 0% Travel expenses 310,000 92% Other costs 200,000 36% Suppose the direct costs incurred for Job 2016 is $58,000. Required: Calculate the total cost of Job 2016
Mementos Academy is assessing whether to outsource its student enrolment processes. The general process followed by staff in the enrolment office is to first validate students’ prior academic record (e.g., secondary school results) and send an offer of enrolment, provide degree advice and enter students’ study program details into the student record system, and collect fees.
The following table shows the costs associated with these three processes:
|
Cost |
Validation |
Student records |
Fees collection |
|
Staff salaries |
70,400 |
43,900 |
39,700 |
|
Data processing |
9,200 |
32,500 |
7,900 |
|
Telephone |
1,700 |
4,600 |
3,000 |
|
Postage |
- |
1,500 |
4,000 |
|
Consumables |
3,700 |
45,900 |
11,800 |
|
Electricity |
1,600 |
3,100 |
3,000 |
|
Equipment |
12,200 |
35,800 |
31,900 |
|
Insurance |
1,600 |
3,300 |
2,600 |
The academy processes an average of 14,000 student enrolments each year.
Required:
- Apply
process costing to calculate the total cost per student enrolment. - Discuss whether the total cost per student enrolment calculated in (a) provide a reliable estimate of the costs incurred to process each enrolment?
Exercise #3
Velvet Ltd provides legal services and has firms across the Asia-Pacific. It adopts a
|
Cost |
Percentage of direct costs |
|
|
Professional staff salary |
3,200,000 |
95% |
|
Administrative staff salary |
370,000 |
60% |
|
Rent and insurance expenses |
630,000 |
0% |
|
Utilities expenses |
310,000 |
0% |
|
Law Society membership |
120,000 |
0% |
|
Travel expenses |
310,000 |
92% |
|
Other costs |
200,000 |
36% |
Suppose the direct costs incurred for Job 2016 is $58,000.
Required:
Calculate the total cost of Job 2016.
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