Process costing: university enrolments Flagstaff University is exploring the possibility of outsourcing part or all of its enrolment function. This function involves three separate processes:
(a) Validation, where the new student’s secondary school results are sighted and the university’s offer of enrolment is validated.
(b) Student records, where the student’s study program details for the current year are entered into the student record system.
(c) Fees collection, where students pay their union fees and upfront course fees, if they choose to do so. The annual costs of these three processes are:
The university processes 14,000 student enrolments per year.
1. Calculate the cost per student enrolment for each process.
2. Calculate the total cost per student enrolment.
3. Does the total cost per student enrolment provide a reliable estimate of the costs incurred to process each enrolment? Explain your answer.
4. Apart from informing its outsourcing decision, how might the university’s management use this information?
5. Would you recommend estimating service costs for all major student services in the university? Explain your answer.