Allocating University Administrative Costs in a Responsibility-Centered Management (RCM) Model

Authors

Marvin L. Bouillon, University of Southern Mississippi
Clemense Ehoff Jr., Central Washington UniversityFollow
Kenneth A. Smith, Association for School Accounting, Auditing and Accountability

Department or Administrative Unit

Accounting

Document Type

Article

Author Copyright

© 2021 IMA

Publication Date

6-2021

Journal

IMA Educational Case Journal

Abstract

RCM has recently become popular with university presidents across the U.S. Many deci­sions are being made about revenue and cost allocation without serious thought to the conse­quences. In this case, we provide numerous avenues for the students to discuss additional rev­enue and cost allocations approaches. Generally, revenue allocation is done based on student credit hours (SCH) and the number of majors. In this case, we look at different percentages of the revenues being allocated on SCH and the numbers of majors. We also introduce the percentage of students who graduate from a specific college and nongeneral education SCHs. Finally, we exam­ine the difference between apportioning administrative costs based on a fixed rate of revenues (revenue tax rate) or an activity-based costing approach. As the instructor, you can focus on the issues you want or ask your students to think like a college dean.

Comments

This article was originally published in IMA Educational Case Journal. The full-text article from the publisher can be found here.

Due to copyright restrictions, this article is not available for free download from ScholarWorks @ CWU.

Recommended Citation

Bouillon, M. L., Ehoff, C., & Smith, K. A. (2021). Allocating University Administrative Costs in a Responsibility-Centered Management (RCM) Model . IMA Educational Case Journal, 14(2).