Appaloosa county day care center, inc

1. APPALOOSA COUNTY
DAY CARE CENTER, INC.
Florida Memorial University
Bus 501 Accounting for Management
Fall 2011
Dr. Rosalie C. Hallbauer
A. Wesley Hemmans
Mary Saddler
Gerald Turner

2. 1. COST AND PROFITABILITY ANALYSIS
• Infant childcare
• Toddler childcare
• Pre-K childcare
• Rent - School district
• Rent - Head Start

3. 2A -IDENTIFY DIRECT COSTS
 Labor costs are the only direct costs associated with
the programs.
• Food costs would be direct costs to the kitchen area
but indirect to the end services.

4. 2B- WHICH COSTS WOULD BE
ORGANIZATION OR FACILITY
• The costs that would be considered to be
organization-sustaining costs include depreciation,
building insurance, and interest expense on the
mortgage debt.
• Both ACDC and the tenants use the facility and, thus,
should participate in the costs associated with
acquiring the space.

5. 3. ASSIGN COSTS
FROM TABLE 2
• Occupancy costs – Indirect
• Employee Support costs
• General & Administrative costs
• Program Support costs
• Occupancy costs – Building Usage
• Wage Expenses – Direct

6. 4. IDENTIFY THE COST DRIVERS THAT HAVE
A CAUSAL RELATIONSHIP
Cost Pool Cost Driver
Occupancy costs–Indirect Square footage
Employee support costs Number of ACDC program
employees*
General & administrative costs Total number of children enrolled
Program support costs Total daily population at ACDC*
Occupancy costs–Building usage Total daily population in building*
Wages expenses–Direct Number of employees assigned to
rooms

7. 5. COST-DRIVER
Cost Pool Total Cost Driver Capacity Activity Rate
Occupancy – Indirect $ 25,745 8,000 $ 3.22
Employee costs 850 12 70.83
General & admin.
22,295 78 285.83
costs
321.27
Program costs 18,955 59
Occupancy—Building 112.60
13,850 123
usage
Wages – Direct 94,255
Total Cost $175,950

8. 6-REVENUE AND COST ASSIGNMENTS
Pool Activity School
Costs Rate Infant Care Toddler Care Pre- K Care District Head Start Total
$28,530 $68,710 $4,200 $6,360 $107,800
Revenues
$
1 Square Footage 25,745 3.22 850 2,735 1375 4,425 1375 4,425 1750 5,632 2650 8,528 8000 25,745
2 Total number of $
staff 850 70.83 3 213 5 354 4 283 0- 0- 12 850
3 Total number of $
children 22,295 285.83 11 3,144 35 10,004 32 9,147 0- 0- 78 22,295
4 Avg daily $
staff/child pop 18,955 321.27 10 3,213 26 8,353 23 7,389 0- 0- 59 18,955
5 Avg pop of $
programs 13,850 112.60 10 1,126 26 2,928 23 2,590 18 2,027 46 5,180 123 13,850
6 Wage- direct
allocation 94,255 20,915 41,830 31,510 94,255
Total costs 31,346 67,894 55,344 7,659 13,708 175,950
($2,816 ($3,45 ($7,43
) $816 $7,306 9) 8) ($5,500)
Net income/(loss)
per Prog

9. 7A-PROFITABLE PROGRAMS
• Toddler care
• Pre-K care.

10. 7B- UNPROFITABLE PROGRAMS
• Infant care
• School district tenant
• Head Start tenant

11. IMPROVING PROFITABILITY
• The center could raise the childcare rate of the infant care.
• The center could eliminate the infant care program
• Another possible action is to raise the rates for the leased
rooms.