FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Question 2
Capital University, a midsized university in a capital city recently received an offer from BrainTrust Teaching
Services to teach all of the first year accounting courses at the university. There are currently 10 sections of
1st year accounting taught at Capital University. Cost per section are as follows:
Description
Cost
Professors
Classroom/building
Teaching Assistants
$20,000
$4,000
$2,000
Notes
Half of these costs can be avoided by laying off staff
This space can not be used for other purposes
All costs can be avoided
As well, it is estimated that fixed administrative costs are $1,000 per section.
BrainTrust has proposed that they can teach all of the sections for a total cost of $105,000
Should Capital accept this special offer? (include both qualitative and quantitative analysis)
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Transcribed Image Text:Question 2 Capital University, a midsized university in a capital city recently received an offer from BrainTrust Teaching Services to teach all of the first year accounting courses at the university. There are currently 10 sections of 1st year accounting taught at Capital University. Cost per section are as follows: Description Cost Professors Classroom/building Teaching Assistants $20,000 $4,000 $2,000 Notes Half of these costs can be avoided by laying off staff This space can not be used for other purposes All costs can be avoided As well, it is estimated that fixed administrative costs are $1,000 per section. BrainTrust has proposed that they can teach all of the sections for a total cost of $105,000 Should Capital accept this special offer? (include both qualitative and quantitative analysis)
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