Pass Fast, Inc. is considering two alternative locations in which to conduct its CPA review course. One alternative is an exclusive hotel; the other is a moderately priced training facility. The hotel

Pass Fast, Inc. is considering two alternative locations in which to conduct its CPA review course. One alternative is an exclusive hotel; the other is a moderately priced training facility. The hotel is in a central location easily accessible to potential students. The training facility is in a less desirable location. Pass Fast has gathered the following cost data regarding the two locations.

Cost Items

Hotel Training

Facility

Relevant? Cost

Behavior Product

or GS&A

Rental Fee for Classroom $2,000 $1,500

Twenty Advertising Brochures Distributed to each Student for Referrals

250

250

Cost of Instruction 5,000 5,000

Books (per student) 100 100

Refreshments (per student) 5 4

Depreciation on Instructional Equipment

400 400

Allocated Portion of Accounts Receivable

Collection Costs

450

500

a. In the column titled “Relevant?” indicate whether each cost is relevant (Yes) or not relevant (No) to deciding which facility to rent for the course.

b. In the column titled “Cost Behavior” indicate whether each cost is fixed, variable, or mixed relative to the number of students attending the course.

c. In the column titled “Product or GS&A” indicate whether each cost would be classified as a product cost or a general, selling, and administrative (GS&A) cost.

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