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Management accounting case study
Finance & Accounting
Pages 5 (1255 words)
To: John – Project Manager From: A.B.C Consultant Subject: Activity Based Costing at The University of Australia Date: May 13, 2013 Memorandum Introduction This memorandum provides information relative to the implementation of activity based costing (ABC) system at your institution.
The table in Exhibit 1.5 provides this information. Exhibit 1.5 Calculation of the Profitability of Each Cost Object Description Cost Objects Accounting Economics Law Revenue 450,000 320,000 525,000 Expenses 205,132 149,704 192,164 Profit 244,868 170,296 332,836 Percentage 54.42% 53.22% 63.40% Exhibit 1.5 indicates that Law is the most profitable course with a percentage profit of 63.4% followed by Accounting with 54.42% and Economics the least profitable with 53.22%. The difference is profitability among the three courses can be attributed to the differences in the fees charged per EFTSL and the amount of government grant received per EFTSL. The student fee per EFTSL is highest for the Law course and lowest for the economics course. In fact, the student fee for the Law course is $6,000 or 67% more than the economics course and $5,000 or 50% more than the Accounting course. The government grant per EFTSL for the Economics course is $1,000 or 40% higher than the Accounting course and $1,000 or 17% more than the Law course. In total the Revenue per EFTSL for the Law course is $6,000 or 40% more than that for Accounting and 31% more than that for Economics. ...
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