Meloy Limited is a large management training company based in the West of England. They offer two 'Accounting for Managers' courses: one is designed to meet the needs of the customer (Tailored), the other is a standard pre-designed course (Standard). The directors of the company want to know the true cost of running the two courses. They believe that the standard course is just breaking even. A decision needs to be made about whether to stop offering this course. The following list of overheads is available: Overhead Costs Managers' salaries Lecturers' wages 220,000 390,000 618,000 Rent IT costs 500,000 Meloy Limited's current full costing system allocates all overhead costs based on number of students per annum. The directors believe that the following cost drivers are more appropriate to allocate overheads: Overhead cost Cost Driver Number of appointments Number of hours spent teaching Total student's days spent in classrooms Hours spent logged in Managers' salaries Lecturers' wages Rent IT costs After analysing the activity of the courses, the following information has been collected: Tailored Total Standard Number of appointments Number of hours spent teaching Total student days spent in classrooms Hours spent logged in Number of students 50 5 45 30,000 28,000 2,000 3,000 1,500 1,500 18,000 2,000 20,000 200 300 The customers pay fees of 7,000 per student for the standard course. The fees for courses designed to meet the needs of the customer (tailored) are 10,000 per student. Direct costs have been calculated to be approximately 50 % of the course fee. Required: 1. Calculate the cost per student of the 'Standard' and Tailored' courses using Activity Based Costing 2. Based on your calculations in part (a) AND using your commercial awareness make arguments for and against closing either course. Consider the method you have used