Close-end matching grants, Cost Accounting

Assignment Help:

RC School District has a large number of students in need of remedial instruction.  The superintendent of RC School System can allocated her budget between purchasing X units of remedial instruction at a price of $2,000 / unit and spending an amount ($Y) on all other school activities.  (For the purposes of this problem, assume that “all other school activities” can be viewed as a composite commodity with a per-unit price of $1,000.)  The Superintendent has a budget of $800,000, raised through local taxes, to allocate between the two activities.

The State Legislature is considering ways to induce RC County to purchase more units of remedial education for underachieving students.  It is specifically considering various forms of grants.

1. Budget Constraints

a. Draw and label Superintendent’s budget line with no State aid (Make sure to put units of remedial instruction on the horizontal axis)

b. Assume the Superintendent chooses to purchase 100 units of remedial instruction and 600 of “other school activities.  Label this is allocation as point “K” on your diagram

2. Open-Ended Matching Grants

a. One option for the State is an open-ended matching grant, under which the state would match RC School District one-for-one every dollar the District spends on remedial instruction.  Draw and label the superintendent’s new budget constraint under this program (you should draw this new budget line on the same graph you produced in #1 above)

3. Close-End Matching Grants

a. A legislator, fearing school districts will respond so aggressively to the subsidy for remedial instruction provided by the matching grant that it will be too costly, proposes that the matching grant program be closed-ended, such that no district can receive more than $100,000 of state aid.  Draw and label the Superintendent’s budget constraint under this closed-end matching grant program (You should draw a new budget line, using the same chart from #1 and #2 above)

b. As a legislator interested in increasing remedial education services, do you think making the matching grant closed ended will lead RC County to provide fewer units of remedial education than if the matching grant were open ended?  Explain.  (Hint, think about income and substitution effects).


Related Discussions:- Close-end matching grants

Prepare a statement of comprehensive income, Good Food Company is a local m...

Good Food Company is a local manufacturer of instant noodles. Established in 2005, their business has been growing steadily. Their products, which are available in 3 flavors, are s

#title., how does idle capacity effect cost behavior patterns and factory o...

how does idle capacity effect cost behavior patterns and factory overhead application methods

Budget, a company has the budget for manufacturing overhead based on direct...

a company has the budget for manufacturing overhead based on direct labor hours. budgeting at 10,000 direct labor hours are as follows. Variable costs= 160000 Fixed Costs

Identify the stakeholders and organization, i.   Identify the organization ...

i.   Identify the organization ii.  Identify the stakeholders iii. Give the major requirements for the IT application iv. Reflect on how difficult it was to do the require

Calculate the cost per unit for products, Chemical Recovery Company uses co...

Chemical Recovery Company uses common machinery to manufacture two products.  Each year, the company has a total of four productions runs, which is two production runs for each pro

Standards and budgets, Standards and Budgets Budgets like you recall f...

Standards and Budgets Budgets like you recall from the previous section, are simply plans for expected future performance expressed in quantified monetary terms. Therefore the

Calculate the minimum annual sales, a factory operates a small canteen but ...

a factory operates a small canteen but its annual operation has consistently shown a loss:

Absorption costing, Absorption Costing The process described in this s...

Absorption Costing The process described in this section by that net overheads are absorbed into production naturally enough is identified as absorption costing.  The absorpti

Process costing, If question (CA IPCC) is silent which method to follow: av...

If question (CA IPCC) is silent which method to follow: avg cost or fifo or lifo?

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd