Week 2, DQ 2 - Facility level cause and effect relationship...

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Week 2, DQ 2 Aside from finding and reporting costs of activities, ABC employs multiple cost drivers. The four different activities, their description, and example of each are: Unite level – A volume related driver. An example of this would be UOP…if each student were to be given a hard-cover book and a laptop, the costs would increase. Batch level – Cost drivers for batch level are for every batch produced. At UOP, a facilitator’s remuneration remains the same whether he or she has 15 or 25 students in the online class. Product level – differs from batch level, in that batches or number of units are of no consideration. In product level, the cost is applicable to the entire product line. An example of this is if UOP were to hire a consultant to develop a special course…in this case, the cost would be assessed to the course.
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Unformatted text preview: Facility level cause and effect relationship is applied in this level. Using the same UOP example, the number of students per program would be used. At the facility level, the online costs of library, ALEKS, Tech Support, etc, would be used by all students, not taking into account the students subjects. In an effort to have a fair cost allocation at UOP, Staff salaries would be at the unit level, Facilitator salaries at the Batch level, Consultants fees would be at the Product level, and Services at the Facility level. This would produce a different cost-allocation, that would be beneficial in identifying losses, if say, there were an increase in number of studentsbut still reporting a loss....
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