How to answer this case?

1.Diagram the existing cost system used at AHU to assign costs to SB and SE in 2020. Clearly identify the allocation bases as well as the rates used to assign these costs. Is it an ABC system? Why?

2. What is the budgeted cost and profitability for SB and SE (either in total or per student) under the existing cost system in 2020?

3. Diagram the cost system suggested by the new cost study for 2020. Clearly identify the allocation bases as well as the rates used to assign costs.

4.What is the budgeted cost and profitability for SB and SE (either in total or per student) under the cost system suggested by the new cost study in 2020?

Exhibit 3 shows there is a significant cost overrun for direct labor. Analyze these results carefully using data provided in the case for SB and SE, respectively. Compare the analyses for SB and SE. Explain potential causes for the differences?

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