GreenfieldHillsApartments - Assignment Questions 1 How many...

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Assignment Questions: 1. How many cost objects do they have? What are they? ✔ 2. How many activities do they have to consider? 3. How were costs assigned to each activity?✔ 4. How were the activity rates developed?✔ 5. Analyze the costs assigned to the cost objects.✔ 6. Compare the ABC Allocation to a standard cost system.✔ 7. What to do about outsourcing landscaping?✔ Greenfield Hills Apartments Case Analysis by Jeremiah Hearon | Joe Liao | Jay Dholakia
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Team Name: J 3 March 16th, 2016 MGT 4015 Professor Michael Kilgore Greenfield Hills Apartments is an apartment complex in Milwaukee, WI that primarily caters to young professionals between the ages of 22 and 40. It offers one and two bedroom accommodations and a recreation center with many amenities, including a gym, pool, and tennis courts for its tenants to enjoy. Unfortunately for the management team, the recreation center is the main source of concern, as they discovered only 25% of the tenants regularly use the facility. They asked themselves whether it really makes sense to have such a huge facility with high maintenance costs that is being severely underutilized. They also wanted to better understand the cost differences between one bedroom and two bedroom apartments. A two bedroom apartment cost 50% more than a one bedroom but did that substantial premium have justification in cost realities? Finally, the complex manager - Mike Plaxer - had to determine whether or not it was cost effective to outsource the complex’s landscaping work to a third party for $220,000, or to keep it in house. Thanks to discussions within management and between the bookkeeper and the outside accountant, it became evident that an activity based costing system would be their best
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means of correctly identifying the true costs of the above objects. To that end, the team hired a consultant to help them build said costing system. Murray Single, the consultant that was hired, along with J 3 Consulting Group, immediately got to work. The first step in their ABC costing system was to determine the cost objects the apartment complex’s costs would be assigned to. The main entities within the complex were the apartments themselves, in the form of one bedroom and two bedroom accommodations, and the additional facilities (i.e. the recreation center) available to the tenants. The recreation center was further divided into five small subsets ranging from aerobics classes to swimming classes. The
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