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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Identify activity bases

For a major university, match each cost in the following table with the activity base most appropriate to it. An activity base may be used more than once or not used at all.

Cost: Activity Base:
1. Instructor salaries a. Student credit hours
2. Admissions office salaries b. Number of students living on campus
3. Student records office salaries c. Number of enrollment applications
4. Financial aid office salaries d. Number of students
5. Housing personnel wages e. Number of enrolled students and alumni
6. Office supplies f. Number of financial aid applications

To determine

Cost Behavior: It refers to the method in which a cost changes with respect to the changes in its related activities. This method helps the management in estimating costs for decision making and predict future profits.

Activity Base: The activities that cause the cost to vary accordingly are known as activity base.

To match: the given costs with the most appropriate activity base.

Explanation

1.

Student credit hours is the unit of measurement for the number of instructional hours per week throughout a semester given to the students. Thus, the salaries of the instructor would change with the change in the activity base of student credit hours.

2.

Number of enrollment applications refers to the number of students got admission to study in the university. Thus, the salaries of the admission office would change with the activity base of the number of enrollment applications.

3.

Number of enrolled students refers to the number of students who are already studying in the university. The alumni are the number of students who have passed out from the university. The salaries of the student records office for maintaining the students records would change with the change in the activity base of the number of enrolled students and alumni...

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