Question
5-24 Allocation of costs to activities, unused capacity. Heights Academy, a private school, serves 500 students: 200 in the middle school (Grades 6 to 8)
5-24 Allocation of costs to activities, unused capacity. Heights Academy, a private school, serves 500 students: 200 in the middle school (Grades 6 to 8) and 300 in the high school (Grades 9 to 12). Each school group has its own assistant principal, and there is one principal, Brian Smith, for the academy. For any single student, almost all of Heightss costs are indirect. Heights currently has five indirect cost categories, which are listed in the following table. Smith wants to develop an ABC system for the school. He identifies four activitiesacademic instruction, administration, sports training, and community relationshipsrelated to the educational enterprise. Smith and his team identify the number of students as the cost driver of academic instruction and administration costs, and the number of team sports offered by the school as the driver of sports training costs. The cost of maintaining community relationshipsdealing with the town council and participating in local activitiesis a facility-sustaining cost that the school has to incur each year. The table shows the percentage of costs in each line item used by each activity.
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