Question

In: Accounting

Suppose that Whispering Daycare provides two different services: full-time childcare for preschoolers, and after-school care for...

Suppose that Whispering Daycare provides two different services: full-time childcare for preschoolers, and after-school care for older children. The director would like to estimate an annual cost per child in each of the daycare programs, ignoring any facility-sustaining costs. She is considering expanding the services and wants to know whether full-time or after-school care is more profitable.

The following activities and annual costs apply to the daycare centre. Salaries and wages are $100,000. Full-time children arrive between 8:00 and 9:00 a.m. Older children arrive about 3:00 p.m. All the children are gone by 6:00 p.m. Employees estimate that they spend about 25% of their time on meal-related activities, 25% supervising naps or recreation, 12% in greeting children or sending them home, and the rest of the time presenting educational experiences to the children. Meals and snacks cost about $24,000. Preschoolers receive 3 snacks and 1 meal per day, and the older children receive 1 snack per day. On average, snacks and meals do not differ in cost. Supplies cost $8,000 for the full-time childcare program and $6,000 for the after-school program.

Currently, 25 children participate in full-time care and 10 children in after-school care. Because Whispering Daycare maintains a waiting list for openings in its programs, the number of children in each program remains steady.

(b) Assuming 200 days of daycare for a year, estimate the annual cost per child in each program. (Round answers to 0 decimal places, e.g. 5,275.)

Solutions

Expert Solution

Particulars Denominator Full Time After School Total
No of students [A] 25 10 35
No of meals/student [B] 4 1
Weighted Average [C] = [A]*[B] 100 10 110
Salaries & Wages                    100,000
1) Meal related activities @25%                       25,000 /[C]            22,727               2,273
2) Supervising naps @25%                       25,000 /[A]            17,857               7,143
3) Greeting children @12%                       12,000 /[A]              8,571               3,429
4) Others                       38,000 /[A]            27,143             10,857
Meals & Snacks                       24,000 /[C]            21,818               2,182
Supplies              8,000               6,000
Total Cost          106,116             31,884
Annual Cost per child /[A]              4,245               3,188

Based on the table above it looks like the after school program is more lucrative


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