Northern Community College $($NCC$)$ has $4,000$ full$-$time students and offers a variety of academic programs in three areas:

Item Professional Studies Arts Technology Total

Full$-$time students $200010001000$ $ $4,000\mathrm{.}00$

Professors$$ salaries $ $1,260,000\mathrm{.}00$ $ $650,000\mathrm{.}00$ $ $780,000\mathrm{.}00$ $ $2,690,000\mathrm{.}00$

Administrative salaries $ $105,000\mathrm{.}00$ $ $70,000\mathrm{.}00$ $ $70,000\mathrm{.}00$ $ $245,000\mathrm{.}00$

supplies $ $40,000\mathrm{.}00$ $ $150,000\mathrm{.}00$ $ $50,000\mathrm{.}00$ $ $240,000\mathrm{.}00$

Teaching support $ $160,000\mathrm{.}00$ $ $100,000\mathrm{.}00$ $ $80,000\mathrm{.}00$ $ $340,000\mathrm{.}00$

facilities $ $275,000\mathrm{.}00$ $ $150,000\mathrm{.}00$ $ $175,000\mathrm{.}00$ $ $600,000\mathrm{.}00$

Total direct costs $ $1,840,000\mathrm{.}00$ $ $1,120,000\mathrm{.}00$ $ $1,155,000\mathrm{.}00$ $ $4,115,000\mathrm{.}00$

$.$ The overhead costs at NCC are significant, totaling over $60\%$ of direct costs. Total annual overhead costs at NCC are as follows:

cost

Administrative salaries $ $900,000\mathrm{.}00$

Facility costs $ $1,300,000\mathrm{.}00$

Office expenses $ $300,000\mathrm{.}00$

total OH costs $ $2,500,000\mathrm{.}00$

$.$

Upon returning to NCC$,$ Maple decides to implement ABC. She, along with the Assistant CFO, James West, begins by identifying the key activities used to support the teaching programs. Rather than getting too detailed with respect to identifying activities in the initial implementation, Maple decides to keep the process manageable and comes up with six key activities. Next, base on a series of interviews with various NCC employees who work in the departments covered by the identified activities, Maple and West estimate the percentage of the total administrative, facility, and office expense resources consumed by each activity. Again, to keep the process efficient, Maple rounds all percentages to the nearest $5\%,$ figuring that a $$close enough$$ approach will suffice for this initial implementation and recognizing that the estimates are subjective to begin with. The results are shown below:

Activity Admin Facilities Office

central admin $20\%5\%15\%$

IT $20\%15\%15\%$

Student counselling services $5\%5\%10\%$

HR $10\%5\%10\%$

Library operations $20\%60\%30\%$

Registrar's office $25\%10\%20\%$

Total direct costs $100\%100\%100\%$

Working with key personnel from each of the six activities shown above, Maple and West then identify the activity measure and the quantity of that measure used for each teaching program. Fortunately, NCC implemented an enterprise resource planning system a few years ago, which is already tracking much of the information needed regarding the activity measures and the specific quantities for each academic program:

Activity measure Professional ARTS Technology

central admin hours spent on program $600070007000$

IT processing hours $6000300012000$

Student counselling services Nbr$.$ Of students counselled $180115205$

HR Nbr$.$ Of admin staff and faculty members $211514$

Library operations Nbr$.$ Of library circulations $600030003000$

Registrar's office full$-$time students $200010001000$

Required:

$1.$ Using ABC, complete the following requirements:

a$.$ Complete the first$-$stage allocation of overhead costs to academic programs.

b$.$ Calculate the activity rates for each of the activity cost pools.

c$.$ Using the activity rates calculated in $($b$),$ complete the second$-$stage allocation of overhead to academic programs.

$2.$ Based on the results of $(2),$ calculate the total cost per student $($direct costs plus overhead$)$ of operating each academic program.