In: Accounting
Suppose that Nash 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 $140,000. 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 30% of their time on meal-related activities, 30% supervising naps or recreation, 10% in greeting children or sending them home, and the rest of the time presenting educational experiences to the children. Meals and snacks cost about $19,000. Preschoolers receive 2 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 $9,000 for the full-time childcare program and $7,000 for the after-school program.
Currently, 30 children participate in full-time care and 15 children in after-school care. Because Nash Daycare maintains a waiting list for openings in its programs, the number of children in each program remains steady.
Assuming 200 days of daycare for a year, estimate the annual cost per child in each program
Total No. of Children-days:
Total Hours Spent by each group
Snacks:
Total Unallocated Cost:
Allocation of Salaries and Wages of $140,000:
Allocation of Meals and Snacks Costs of $19,000:
Supplies:
TOTAL
Note: I have rounded the figures to the nearest whole
dollar.
Note: Different interpretations can be taken regarding allocation.
I have worked out in detail based on the interpretations
used.
Note: Allocation of Salaries and Wages could be done differently as
well, to see which is more profitable, by assuming that they are
fixed costs, and hence do not change even if they allow more
children in, from any category. If this is the interpretation you
are taught to take, kindly make note of the same and I can rework
the entire problem accordingly. Feel free to inform.
Hope this helps.
Thank you!