The Vanishing Tuition Quandary: A Responsibility Accounting Case Study

Abstract

Hidden Gem University is evaluating the profitability of each of its degreed programs.  The MBA program is growing but the operating income on the performance report is negative, which makes the program a target for possible discontinuance in the interest of the financial health of the University.  In this case, students will evaluate the given report and various costs allocated to the MBA program to prepare an updated performance report.  Accounting concepts such as cost behavior, flexible budgets, and responsibility accounting are integrated into this case study to encourage students to critically think about how these concepts interconnect and apply in a real-world setting for strategic decision making.