Question
The Study for Success University, a small and new private university, has two academic departments - Accounting (A) and Finance (F). These two academic departments
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
Total; 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.
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