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Question 1 (22.5 marks): The "Study for Success" University, a small and new private university, has two academic departments - Accounting (A) and Finance (F). These two academic departments conduct all the courses run by the university. As the student population is still small and manageable, the two academic departments are supported by just a single service department, namely the Registrar's Office which currently not only carries out the functions related to the admission of students but also handles the administrative functions of the university. The fixed assets in the university consist of smart-boards, computers, air-conditioners, heaters and vehicles Budgeted general overheads for the coming year are as follows: ($) Rent of Campus Building 1,200,000 Computer Maintenance 140,000 Telephone Charges 200,000 Depreciation of Fixed Assets 144,000 Heating and Lighting 600.000 2,284,000 The university assigns overhead costs to all its courses using an overhead absorption rate calculated for each academic department based on lecturers' hours, that is, the total overhead costs are first allocated / apportioned to each academic department using appropriate bases of apportionment and then overhead absorption rates are calculated for each academic department based on lecturers' hours.Other information is given below. Department Accounting Finance Registrar's Office Space occupied 1,500 1,000 500 (square metres) Value of fixed $720,000 $360,000 | $360,000 assets Number of 10 5 10 telephones Number of 30 20 20 computers Lecturers' Hours 2,000 1,450 budgeted Lecturers' rates $50 $50 per hour Overheads specific to each $40,000 $35,000 $30,000 department Registrar's Office costs 60% 40% apportioned Required: answer the questions which follow. Note: the questions require just one-word or short answers (for example part (a) $20,000; or part (b) number of telephones). (a) What is the appropriate basis to use to apportion the cost of the Rent of Campus Building? Answer: (b) What is the appropriate basis to use to apportion the cost of Depreciation? Answer: (c) What is the appropriate basis to use to apportion the cost of Heating and Lighting? Answer: (d) What is the amount of cost of Rent of Campus Building which should be apportioned to the Accounting Department? Answer: (e) What is the amount of the cost of Computer Maintenance which should be apportioned to the Finance Department? Answer: (f) What is the amount of the cost of Telephone Charges which should be apportioned to the Registrar's Office? Answer: (g) What is the amount of depreciation which should be apportioned to the Registrar's Office? Answer: (h) What is the amount of the cost of heating and lighting which should be apportioned to the Finance Department? Answer: (i) How much of the Registrar's Office apportioned and allocated overhead costs should be re-apportioned to the Accounting Department? Answer: 2(j) What is the calculated Overhead Absorption Rate based on lecturers' hours for the Accounting Department? Answer: (k) What is the calculated Overhead Absorption Rate based on lecturers' hours for the Finance Department? Answer: Additional information and questions: A new, one-year, Diploma in Accountancy course is being proposed. The cost of books and handouts has been estimated at $50,000. This cost will be paid for by the university but will be recovered in the calculation of the course fee. Lecturers from both academic departments will be involved in the delivery of the course as follows: Accountancy Lecturers 400 hours Finance Lecturers 200 hours It is expected that 50 students will be enrolled onto the course. (I) Calculate the total direct labour costs for this new course. Answer: (m) Calculate the amount of overheads which will be charged to the Accountancy Department. Answer: (n) Calculate the amount of overheads which will be charged to the Finance Department. Answer: (o) Calculate the expected cost of the new course per student