David has recently been elected as a local councillor for an area in England served by two primary schools (note: English primary school education lasts for seven years). The council has threatened to close the smaller of the two schools (School A) on the grounds that it provides poor value for money compared with the larger school (School B). The biggest single item of cost is teaching staff salaries. David has asked for, and received, a summary of the salary cost for both schools for the 2007/8 financial year (see Appendix). There is substantial local opposition to the threatened closure. David has asked you, as a preliminary step in his investigation of the issue, to:

a) tell him whether or not, on this evidence, School A does appear to provide poor value for money;

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b) suggest possible reasons for any discrepancy in salary costs between the schools.

Identify the cost object that is likely to be used in an architect’s practice which employs 15 architects and 15 support staff.

List the principal costs that are likely to be incurred by the practice and explain how the costs might be identified with the cost object for management accounting purposes

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