Westmount retirement Residence case
Upcoming SlideShare
Loading in...5
×
 

Westmount retirement Residence case

on

  • 1,112 views

 

Statistics

Views

Total Views
1,112
Views on SlideShare
1,112
Embed Views
0

Actions

Likes
0
Downloads
21
Comments
0

0 Embeds 0

No embeds

Accessibility

Categories

Upload Details

Uploaded via as Microsoft Word

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

Westmount retirement Residence case Westmount retirement Residence case Document Transcript

  • WESTMOUNT RETIREMENT RESIDENCENew Costing System and Pricing recommendationExecutive Summary of my Conclusions:The administrator of the Westmount Retirement Residence is concerned about the current cost accounting system.The administrator is not clear on how much each service offered was truly costing, and therefore charged eachresident the same price per month regardless of their needs. In the past, the majority of patients demanded similarservices, and therefore this pricing and costing system was appropriate. However, with demographic changes to thepopulation, some residents required intense medical care, while others were healthy and fit and required less care. Anew pricing model had to be developed that reflected both the size of suite inhabited and the level of medical careand service required by each individual patient.Present System:The Westmount Retirement Residence (WRR) is calculating the cost per resident by dividing the total costs bynumber of residents. This number is then multiplied by inflation of 5 to 8 percent to bring the estimated costs for thecoming year. This is the base cost for Studio apartments, and then the cost for the one bed room and two bed roomsare calculatedby adding 25 % and 50% on the base cost. So there was no system to calculate the varying service need requiredby different residents.The net profit in year 2005 is 2.28%, very low net profit looking at the markets of the same industries. (See Exhibit 1)Recommended System:In the present system, all costs are considered as “fixed costs”. I feel, the costing can be done on activity based costing (ABC)(Eddie McLaney, Peter Atrill, 2010::400) (here in this case it is service based, need based). for Support services. Food services,Laundry service can be done by direct costing (variable costing) depends on the consumption of the resident, but this may takeagain a lot of expenditure to maintains individual costing and billing. Activity- based pricing (ABP) is a pricingmethod that combines market research data with cost accounting information to establishprices for products and services that result in designed profits .(internet resources)Recommendation 1:The net profit must be at least 15% as net profits in the hospitality or caretaking...The ABC costing method has found a warm reception within the healthcare industry (Canby,1995). It is reasonable to suspect that part of its popularity in this industry is due to the fact thatcertain costs of treatments are incredibly high as well as the number of treatments that areavailable. Since the ABC method is more apt to associate the correct costs to the processes thatutilize them then it allows for more accurate billing to the clients. For example, an x-ray processcan be broken down into four primary cost drivers, administrative check-in, patient exposure,
  • patient return, and film processing, which can be accounted for and billed based on usage foreach separate processABC Costing at WestmountThe current costing arrangement at Westmount depended completely on the square footage ofthe residents unit. Thus it is reasonable to anticipate that all stakeholders would benefit fromthe application of the activity based costing system; except of course those residents whorequired the most services. The costs were identified to fall into six categories:1. Food Services2. Support Services3. Laundry4. Recreation5. Facility6. HousekeepingPreviously, each of these costs was allocated overhead by aCLASSIC PEN COMPANYClassic Pens Limited is one of a number of new pen companies was founded in 1987 by Andreas Lambrou and KeithG. Brown and is best known in the pen community for creating a series of sterling silver guilloché engraved limitededition fountain pens based on classic models by different first line pen manufacturers. Andreas Lambrou is probablybest known for his huge, wonderful pen-tome, Fountain Pens of the World, a comprehensive and well illustratedhistory of fountain pens by region, country and manufacturer, published by Classic Pens in 1995. [?] The Classic Pens CP4 was introduced as part of a matched set of 1,865 pens in each of the two designs, theWashington and the Richmond, and is based on the sterling silver Sheaffer Legacy. The Legacy was introduced in1995 and draws heavily on the design of the 1959-1968 landmark Sheaffer PFM, or Pen for Men. The pen has thesame profile and nib as the PFM, but is an all-metal base, rather than the all-plastic or plastic barrel and metal capPFM, and is heavier as a result. The Legacy uses a unique cartridge / converter system that incorporates a removableTouchdown unit, instead of a Snorkel system, as in the PFM. Interestingly, with the two CP4 pens, there are fourLegacy sterling silver pens: the original Legacy, with its linear dashed line engraved pattern, and a relatively rare"plain" version, which was not intended as a regular model, but is essentially the "blank" for the other three pens. Acomplete Legacy sterling collection would need all four pens. 2 Classic Pen Company, originally producing only black and blue pens, decided to expand its product line byintroducing new colors to the market. Based on the traditional financial...
  • OLD MULES FARM CASECASEOld Mule Farmsby David Currie, Lorena Mosnja SkareSource: Richard Ivey School of Business Foundation7 pages. Publication date: May 03, 2010. Prod. #: 910B04-PDF-ENGThe owner of a cow-calf operation must determine the appropriate weight for cows in the herd. The national trend fordecades has been for cow weights to increase because they produce larger calves, but evidence indicates that cowweights may have reached the point where the cost of maintaining a larger cow has become greater than the returnfrom producing a larger calf. Analyzing this issue introduces marginal principles from economics. The case can beextended to a discussion of drivers and allocation of expenses, which are managerial accounting principles. The caseis appropriate for a managerial cost accounting course and for managerial or microeconomics courses. The caseuses concepts such as direct costs, cost drivers, allocation and marginal analysis to examine the issue of appropriatecow weight. The case introduces or provides training in these concepts: marginal analysis; determining cost drivers;cost allocation; modeling and spreadsheet preparation.COST ALLOCATIONTRADE OFF ANALYSISManagement Accounting CaseAlternative:One alternative Old Mule Farms can choose is doing nothing, and just remain what they did in the past. Right nowOld Mule Farms tried to minimize their expense. They sold some of their land to generate funds to cover operatingcost; they rented pasturage to feed their cows; they basically focused on feeding heavier cows in order to get heaviercalves, and then can generate more revenue. They also provide dietary supplements and minerals to maintain calves’health and productivity. Old Mule Farm provided enough nutrients to cows and calves in order to produce morehealthy products; it can help to improve company reputation. Variety beef products are the final goods in thisindustry; and nowadays more and more people concern how healthy their food is; therefore the quality of calves isvery important. If we provide healthy calves, it can improve our company brand name; in the meanwhile it can attractmore consumers. Also, they focus on producing heavier cows toproduce heavier calves, and then can generate more money in a fast way. Moreover, the calves price is increasingduring 2009-2010, and the average calves prices received by farmers in 2010 is 127.75 ($/cwt)1. Assume otherconditions remain unchanged, after doing the breakeven analysis, we can find the breakeven point is 42 (appendix1c); or if all conditions are same, they will have $2325 profit. Breakeven point is the point at which revenues equaltotal costs and profit is zero. By doing this analysis, we can know how many calves we need to sell in this year in orderto be profitable or at least not in a business loss position. According to Ex.1, and Appendix 1(a), we know that in 2008,Old Mule Farms breakeven point is 74 which mean they should at least sell 74 calves to balance their revenue andcost. Right now they only have 50 cows so only can produce 50 calves; they need 24 more cows to be profitable. Undercurrent conditions, they can’t support any more cows.1... View slide
  • Gg Toys CaseGg Toys Case StG.G.ToysThedecline margins our popular in on Gtoftry doIIproduct become has intolerable. production Increasinghaae costs dropped pretaxmarginto less our than10%, below historical our 257omargins, wearegoing Iffar to increase margins, need consider our we to drastically shiftingour production towards sfecialtydoltsaie that earning large prnniumin priceoaer standard line. a our doll -Robert Parker,President, G.G.ToysBackgroundRobert Parker, president of G.G. Toys, was discussing last months operating results with AudreyHausner, G.G.s conkoller, and David Morehouse, G.G.s manufacturing manager. The meeting wastaking place in an atmosphere tinged with apprehension because margins on thelr most popular product,the "Geoffrey doll," had been declining rapidly in the last few years due to rising production costs(summary operating results for the previous month, March 2000, arc shown in Exhibits 1 and 2). Parkersaw no choice but to shift the companys product mix towardsspecialty dolls that carried a high price premium, and thus, a 34% margin. G.G. Toys was a leadingsupplier of high-quality dolls to retail toy stores throughout the U.S, The comPany had started with aunique design for molding highly durable dolls using vinyl and resin materials. G.G. quickly established aloyal customer base among retailers because of the high quality and popularity of its manufactured dolls.It soon established a major presence in the market with its high-volume Geoffrey doll product line. Thecompany operated two separate plants. The Chicago plant was used for the production of various dolls.The Springfield plant was used solely to assemble doll cradles to complement the companys dolls. TheGeoffrey doll was designed to be a replica of an infant boy or girl clothed in a simple pajama outfit withmovable acrylic eyelids and jointed, movable arms and legs. Boy and girl versions of the doll wereproduced to almost identical specifications with minor...Gg Toys Case StG.G.ToysThedecline margins our popular in on Gtoftry doIIproduct become has intolerable. production Increasing haae costsdropped pretaxmarginto less our than10%, below historical our 257omargins, wearegoing If far to increase margins,need consider our we to drastically shiftingour production towards sfecialtydolts aie that earning large prnniuminpriceoaer standard line. a our doll -Robert Parker,President, G.G.ToysBackgroundRobert Parker, president of G.G. Toys, was discussing last months operating results with Audrey Hausner, G.G.sconkoller, and David Morehouse, G.G.s manufacturing manager. The meeting was taking place in an atmospheretinged with apprehension because margins on thelr most popular product, the "Geoffrey doll," had been decliningrapidly in the last few years due to rising production costs (summary operating results for the previous month, March2000, arc shown in Exhibits 1 and 2). Parker saw no choice but to shift the companys product mix towards specialty View slide
  • dolls that carried a high price premium, and thus, a 34% margin. G.G. Toys was a leading supplier of high-qualitydolls to retail toy stores throughout the U.S, The comPany had started with a unique design for molding highlydurable dolls using vinyl and resin materials. G.G. quickly established a loyal customer base among retailers becauseof the high quality and popularity of its manufactured dolls. It soon established a major presence in the market withits high-volume Geoffrey doll product line. The company operated two separate plants. The Chicago plant was usedfor the production of various dolls. The Springfield plant was used solely to assemble doll cradles to complement thecompanys dolls. The Geoffrey doll was designed to be a replica of an infant boy or girl clothed in a simple pajamaoutfit with movable acrylic eyelids and jointed, movable arms and legs. Boy and girl versions of the doll wereproduced to almost identical specifications with minor differences in the...