Question

professional university teaches a large range of undergraduate courses. it is interested in determining the cost equation for the facilities cost as a function of student credit hours so that it an more accurately budget its facilities costs as enrollment grows. information for the high and low cost semesters and volumes for last 5 years appears below semester student credit hours facilities cost spring 2007 250,000 $500,000 fall 2004 300,000 $530,000 using the high low method, with student credit hours as the activity driver, what is the equation for facilities cost (fc) as a function of student credit hours?

Answer 1

The equation for facilities cost (fc) as a function of student credit hours is 350000 + .60 per credit hour

How are facility costs calculated?

Ongoing operating expenses for the facility consist of property taxes, utilities, site maintenance and landscaping, insurance, and facility maintenance and repair costs. Add up the total amount spent on each expense category to determine its cost. Breaking down building costs reveals how much it really costs to run a business. More importantly, there's information about potential savings. Examples include building and equipment depreciation, operation and maintenance, administrative assistance, library services, and student services.

The variable cost per student credit hour = change in cost/change in credit hours

= [530000 - 500000] / [300000 - 25000]

= 30000 / 50000= $ .60 per credit hour

Fixed cost at highest activity = 530000 - [300000 * 0.6]

= 530000 - 180000

= 350000 Cost function

= 350000 + .60 per credit hour

To learn more about facility cost, visit: brainly.com/question/28336283

#SPJ4