Cost Analysis and Organization for Inglis University Library

1672 Words4 Pages

This memo is in response to the views of the Inglis University Library donations department. The idea of the this case is to help readers develop a better understanding of what the donations department of the library are being used for and what the effects are of those decisions. For example, the donations can be used to hire part-time employees to help keep up with the growing number of books. However, the increase in books and profit has increased unit cost that was claimed to be already too high. The case helps to comprehend cost concepts and how to organize it into data for proper analysis. This memo will explain how to analyze and evaluate the costs and then explain the results in a managerial way whether or not the additional funds should be rejected.

Cost Driver and Relevant Range
The activity cost driver is a factor that affects expenses of a certain operation by driving the prices of a certain activity. Appropriate cost drivers for analyzing the cost structure would include the portion of the general facility costs for the space provided from the library for donation activities and most importantly radio frequency identification (RFID) inventory tags. There is also the computerized system for the library’s catalogue system and the salaries of workers to keep up with the growing number of books. To justify my answer think about the RFID that is placed on each book so that it can be tracked to know whether or not it has been checked out or is still available. This alone drives up the cost of each book. Relevant range also becomes important to mention because it is the specific activity level that has a minimum and maximum boundary for everything to flow properly and keep costs the same. The appropriate workload...

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...ngs if the donations department decided to completely eliminate it completely, but the savings that I calculated was lower than what the committee calculated. The savings the budget committee found includes the part time student help/additional funds, which has not been incurred yet. This portion of the building being used by the donations department to me actually helps the library based on facility costs because it may become vacant and will be paying for an empty room. So the library would only be saving $19,000 at the very least instead of $23,900. It could even be lower considering that those facility costs (highlighted above) would still be paid for by the library if they decided to use it for something else in replace of the donations department. These are some of the errors in logic that the committee made that changes the analysis of this case study.

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