Reference no: EM131760680

Jefferson County owns and operates an animal shelter that performs three services: housing and finding homes for stray and unwanted animals, providing health care and neutering services for the animals, and pet training services. One facility is dedicated to housing animals waiting to be adopted. A second facility houses veterinarian services. A third facility houses the director, his staff, and several dog trainers. This facility also has several large meeting rooms that are frequently used for classes given by the animal trainers. The trainers work with all of the animals to ensure that they are relatively easy to manage. They also provide dog obedience classes for adopting families.
Estimated annual costs for the animal shelter and its services are as follows:

Direct and staff salaries $60,000
Animal shelter employees' salaries 100,000
Veterinarians and technicians 150,000
Animal trainers 40,000
Food and supplies 125,000
Building-related costs 200,000

On average, 75 animals per day are housed at the facility, or about 27,375 animal days in total. The number of animals housed during the year totaled 4,500. In addition, the trainers offer about 125 classes during about 30 weeks throughout the year. On average, 10 families attend each class. Last year the veterinarian clinic experienced 5,000 animal visits.

One of the staff members just graduated from an accounting program and would like to set up an ABC system for the shelter so that the director can better understand the cost for each of the shelter's services. He gathers the following information:

Square Footage for each Facility
Animal Shelter 5,000 square feet
Director and Training 3,000 square feet
Veterinarian Clinic 2,000 square feet
Percentage of trainer time used in classes 50%
Supplies used for veterinarian services $75,000

Identify cost pools and assign costs to them, considering the three objects of interest

Determine a cost driver for each cost pool and explain your choice

Calculate the allocation rates for each cost pool and cost driver. Interpret the allocation rate for each cost pool (i.e., explain what it means).

Identify and explain to the Director of the shelter the possible advantages and disadvantages of adopting the ABC system.