1. Compute the cost of a single preschool class and a single birthday party using the current cost system.
Preschool Class Costs Birthday Party Costs
Building Related $216,000 Does not count
Salaries $50,000+$20,000*2=$90,000 $5,000*2=$10,000
Supplies & Foods $18,000 $3,000
Advertising Does not count Does not count
Total $324,000 $13,000
Unit Cost $270 $86.67

2. Would you recommend that TRU continue to allocate the building-related costs only to the preschool program? What alternative allocation method would you suggest? Justify your answer. Ignore consideration of excess capacity discussed in question 3 below for this answer. Please discuss any additional information that you feel is needed.
No, I would not recommend TRU continue to allocate the building-related costs only to the preschool program because it is not an accurate way to compute the actual costs for Birthday Party product. I would suggest TRU to use the activity based costing allocation method. To use this......

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Title: Tots R Us
Approximate Word Count: 478
Approximate Pages: 2 (250 words per double-spaced page)

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