RSU has four academic colleges: Agriculture (CA), Business and Technology (CBT), Engineering (CE) and Sciences and Humanities (CSH). During the 2014-15 school year, the president went to these colleges to discuss the budget and the cost of operations. When he attended the College of Business and Technology, he made it clear that he believed the college was very expensive to run. In fact, he said, The College of Business and Technology was being subsidized by the College of Sciences and Humanities, which was not fair to them.

Table 1 presents the prior-years budgets, along with the student credit hours (SCH) and the number of majors (MAJORS) in each college. The president decided that each college would receive 80 percent of its revenues based on SCH and 20 percent based on MAJORS. Additionally, he decided that administrative and overhead costs would be assigned as a revenue tax, or as a percentage of revenues. The revenue tax was determined to be 52 percent of revenues, or $104,000,000 in costs divided by $200,000,000 in revenues. The Revenue Ratio for the College of Agriculture was found by (80% x 25.0%) + (20% x 19.0%), or it is 23.8%. The Revenue Ratios for the other colleges can be calculated in a similar manner.

In this case, we use the 80/20 allocation for revenues.

Table 1 Prior Period Budgets, Student Credit Hours, Number of Majors and Revenue Ratio (Budgets are in millions)
	Prior Year Budgets	SCH (80%)	Majors (20%)	Revenue Ratio
CA	23.00	150,000 (25.0%)*	3,230 (19.0%) **	23.8%
CBT	14.00	66,000 (11.0%)	3,060 (18.0%)	12.4%
CE	26.00	159,000 (26.5%)	5,440 (32.0%)	27.6%
CSH	33.00	225,000 (37.5%)	5,270 (31.0%)	36.2%
Total	96.00	600,000	17,000	100.0%
* The SCH percentages are found by taking the colleges SCH and dividing it by the total SCH for the university. For the College of Agriculture, 150,000/600,000 equals 25.0%. The SCH percentages for the other three colleges are found in a similar manner. **The MAJORS percentages are found by taking the number of majors in the college and divided by the total number of majors at the university. For the College of Agriculture, 3,230/17,000 equals 19.0%. The MAJORS percentages for the other three colleges are found in a similar manner.

Table 2 Simple Calculation of RCM Budget and Comparison to Prior Years Budget for the College of Agriculture (in millions)
Total Tuition	200.00
Revenue Ratio from Table 1	23.80%
Allocated Revenues	47.60
Allocated Administrative Costs (52% of Revenues)	24.75
RCM Budget	22.85
Prior Year Budget from Table 1	23.00
Difference	(0.15)

Table 2 shows the calculations for the RCM budget for the College of Agriculture. Additionally, it is compared to the prior years budget to determine the difference. Based on the calculation in Table 2, the RCM budget would be $22.85 million for the College of Agriculture and the difference is $0.15 million less than the prior years budget.

Table 3 summarizes the RCM budgets, prior years budgets and differences. The RCM budgets for the College of Business and Technology, College of Engineering and College of Sciences and Humanities would be found in a similar fashion using Table 2.

Table 3 RCM Budget Comparisons (in millions)
College	RCM Budget	Prior Years Budget	Difference
CA	22.85	23.00	(0.15)
CBT	11.90	14.00	(2.10)
CE	26.50	26.00	0.50
CSH	34.75	33.00	1.75
Total	96.00	96.00

Dean Sanders approached Gordon Moffitt, the Vice-President of Finance, and asked him to provide her with the budgeted costs associated with each of the four activity drivers in Table 4. Besides that, Gordon provided her with activity driver data per college in Table 5.

Table 4 Budgeted Costs (in millions) and Activity Drivers
Type of Costs	Budgeted Costs	Potential Driver
Facilities	24.00	Square Footage
Human Resources	5.30	# of Employees
Graduate Studies	2.70	# of Graduate Students
Other Administrative Costs	72.00	Revenue Tax
Total	104.00

Table 5 Activity Driver Data per College
College	Square Footage	# of Employees	# of Graduate Students
CA	120,000	186	94
CBT	40,000	72	0
CE	210,000	258	456
CSH	430,000	284	350
Total	800,000	800	900

Requirement:

3. Calculate the new RCM budgets for each college assuming that activity-based costing is being used. (LO 3)