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Deaf Student sign language assistant allocation for class

Much of managerial accounting deals with understanding and allocating costs. There are many different methods for doing so, especially when it comes to indirect costs such as manufacturing overhead. It is important that the costs be allocated in a manner that represents the incurrence of those costs in order to be fair to the company, their customers, and, as we see in ATC 12-5, sometimes even workers.

ATC 12-5 Ethical Dilemma Allocation to achieve fairness

The American Acupuncture Association offers continuing professional education courses for its members at its annual meeting. Instructors are paid a fee for each student attending their courses but are charged a fee for overhead costs that is deducted from their compensation.

Overhead costs include fees paid to rent instructional equipment such as overhead projectors, provide supplies to participants, and offer refreshments during coffee breaks. The number of courses offered is used as the allocation base for determining the overhead charge. For example, if overhead costs amount to $5,000 and 25 courses are offered, each course is allocated an overhead charge of $200 ($5,000 4 25 courses). Heidi McCarl, who taught one of the courses, received the following statement with her check in payment for her instructional services.

Instructional fees (20 students 3 $50 per student) $1,000
Less: Overhead charge (200)
Less: Charge for sign language assistant (240)
Amount due instructor $560

Although Ms. McCarl was well aware that one of her students was deaf and required a sign language assistant, she was surprised to find that she was required to absorb the cost of this service.


a. Given that the Americans with Disabilities Act stipulates that the deaf student cannot be charged for the cost of providing sign language, who should be required to pay the cost of sign language services?

b. Explain how allocation can be used to promote fairness in distributing service costs to the disabled. Describe two ways to treat the $240 cost of providing sign language services that improve fairness.

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Solution Preview

a. The school should have a policy to determine how the cost will be distributed. It does not seem fair for the teacher to have to pay for the sign language services. The school should come up with a way that distributes the cost to make it fair for everyone. The costs should be paid by the school. Of course many schools will pass this cost along to the students. Since they cannot charge that student ...

Solution Summary

Who should be required to pay the cost of sign language services are discussed with keeping in mind the specifications of the Americans with Disabilities Act.

Two ways that allocation can be used to promote fairness in distributing service costs to the disabled are explained.