The Daycare Center has been in business for a number of years and Question Description: In the first column, list the expense name. We need to go one step further to break total variable costs into variable cost per unit.
Fill out the following format for the high-low analysis: Note that two half-day students equal one full-time-equivalent student FTE for headcount purposes. You have been retained as a consultant for the Daycare Center. The challenge to the Daycare Center is to increase enrollment.
What you need to do is described below. If this were a business with hundreds of expenses, this would be very laborious. We would have to put the utilities in the fixed category. The center is licensed by the state and meets all regulatory requirements for health and safety.
To do that, you will need to understand how the business is operating now and decide what areas need improvement. If you divide the incremental variable cost by the difference in units FTEs in this caseyou get the variable cost per unit.
Using the Account Analysis Method prepare a forecast for the third and fourth quarters based on current management strategy — include a row for expected FTEs by quarter. If you would like further description of the account analysis method there is a video you may watch at http: The center is located in an affluent community and has four other competitors in a five-mile radius.
All centers offer comparable programs, at comparable rates. Your ultimate goal will be a report to the director outlining a strategy for improved profitability for the Daycare Center. We prefer that the time periods would not be sequential. Multiply the variable cost per unit by the number of FTEs.
For example, the weather may affect the cost of utilities, but the number of children is unlikely to affect the utilities. The budget is being used for this analysis since we do not have a full year of actual expenses and there could be seasonable variability that would affect the quarterly amounts.
Account Analysis Method I know we did not specifically review the account analysis method in class, but it is one of the most basic methods of budgeting.
For the budget, the utility expense can have the same number every month, but it is unlikely the actual numbers will come in that way. You can get those from Exhibit 1. In the third column, put a V in the column next to the identified variable expenses.
The director does not have balance sheet information, but has provided you with the following information: Use the total year column from Exhibit 1 for the numbers. By comparing this to the current yearly plan, you will see how far off the plan the Daycare Center is operating.
Fixed costs do not vary with the cost driver—the children. It is best when the activities of each period are very similar, such as electricity rates. The following analyses should be prepared: Restate the cost function to an annual cost function multiply everything by 4 so that it may be compared to the account analysis method.
In this case there were not many expenses, so the account analysis method worked very well. What is the yearly cost function for the Daycare Center for the current year using the account analysis method?
This will give you an opportunity to use some of the skills you have recently learned in ACCT Accounting for Managers. A simple guess might be that they need to cut expenses; that is not the right answer. A few months ago, regional management dismissed a director who had a confrontational style, potentially causing a decrease in attendance.The advantage of working with live business data is that they make the case study more realistic.
What is the cost function for Sunshine Daycare using the expense analysis method on the Sunshine Daycare Center: Growing a Business to Proﬁtability 7.
INTRODUCTION AND BACKGROUND This case study forms part of the Big Lottery Fund National Well-being Evaluation. CLES Consulting was commissioned in with nef to undertake the evaluation.
For more than 39 years, Sunshine Daycare Center has continued the tradition of offering a high quality educational experience at an affordable price. Related Documents: Sunshine Center: an Instructional Case Essay Sunshine Daycare Essay Mackenzie Price mint-body.com Comp 1 28 September “Sunshine Daycare” Mrs.
Melissa Morris Parent o Suzy N Hwy 61 Blytheville, AR Dear Mrs. Morris, Sunshine daycare has a great team that works well with children and the parents.
As a group, choose one from the marketing and one from the program group to help increase student enrollment for the Sunshine Daycare Center to implement in the new operating year. Start with the forecasted year-end numbers from the current year – At Sunshine Day Care Center, we integrate knowledge and skill building into purposeful play for our students.
Our low student-to-teacher ratios, experienced staff, and supportive learning environments prove to be an effective program for all students.Download