Learning Goal: I’m working on a accounting project and need an explanation and answer to help me learn.

The University Administrative Costs case appears starting on the next page of this document. Your team must answer the following questions:

1. Build an Excel spreadsheet to analyze the impact on colleges of the RCM budget under different bases for allocating revenues:

a. Which colleges would see an increase (decrease) in revenues if revenues are allocated to each college assuming that 75 percent will be based on SCHS and the other 25% will be based on the number of majors?

b. How would your answer to question 1 change if the allocations were 85% based on SCHS and 15% on the number of majors?

c. Which colleges would see an increase (decrease) in revenues if revenues are allocated to each college, assuming 70% will be based on SCHS, 20% based on the number of majors, and the final 10% based on the graduation percentages?

d. Which colleges would see an increase (decrease) if revenues are allocated to each college, assuming 80% will be based on nongeneral education SCHS and 20% will be based on the number of majors? What can a college do to improve its situation, assuming it does not have a lot of general education SCHS?

2. Show the calculations for the RCM budgets like Table 2 for the College of Business, the College of Education, and the College of Sciences.

3. Calculate the apportioning (application) rates per the activity cost drivers provided in Tables 4 and 5.

4. Assuming that revenues will be allocated 80-20 based on SCHS and the number of majors, recalculate the new RCM budgets for each college, assuming that activity-based costing is being used. Which colleges would see an increase (decrease) in their budget?

5. How might the new RCM budget, using activity-based costing mentioned in question 4, impact the behaviors of the colleges? Be sure to consider the fact that declaring a major is not the same for all colleges.

Note:

(Your document is a formal business report. You may use any acceptable business format for your document, e.g., memo, letter, report, or report with cover letter/memo)

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