In: Accounting
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.)
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