8.7.3

The Saints for Health operates three sports programs: basketball, lacrosse, and field hockey. The camp provides a unique opportunity for boys and girls to engage in intensive summer sports activities. Parents often bring all of the children for the six-week session. Due to diminishing profits in the basketball program, they are considering eliminating the basketball program. Camp owner Mikey Matheny has asked you to review the income statement. Then you will need to determine the impact on profit from dropping the basketball program and make a recommendation. Field Hockey $50,000 $6,000 $44,000 Saints for Health Project Income Statement Total Basketball Lacrosse Camp Tuition $190,000 $75,000 $65,000 Variable Costs for Food and $26,000 $12,000 $8,000 Staff Contribution Margin $164,000 $63.000 $57,000 Fixed Expenses Equipment Rental - Traceable $25,000 $10,000 $7,500 Salaries of Sports Program $21,000 $10,000 $10,000 Directors Traceable Allocated Common Fixed $90,000 $43,200 $27.900 Expenses** Total Fixed Expenses $136.000 $63,200 $45,400 Net Operating Income (Loss) $28,000 ($200) $11,600 $7.500 $1,000 $18.900 $27.400 $16,600 Question 1 15 pts Assuming the Basketball Camp is dropped, what will be the new Net Operating Income (Loss) for Saints for Health Your answer should be in the form $99,99.99. Question 2 25 pts Assuming the Basketball Camp is dropped What is the impact on profit for Saints for Health and by how much? (Will it Increase? Decrease? or Stay the Same? And by how much?) Indicate what happens to profit and state the amount in the form $99,999.99 Question 4 30 pts What if the allocated fixed costs could be dropped by eliminating the camp nurse and camp maintenance worker who currently earn a total of $50,000? Write a memo to Mr. Matheny outlining your recommendation and your reasoning. Be sure to consider all of the stakeholders. Edit View Insert Format Tools Table 12ptv Paragraph v B IU 2 Tv The Saints for Health operates three sports programs: basketball, lacrosse, and field hockey. The camp provides a unique opportunity for boys and girls to engage in intensive summer sports activities. Parents often bring all of the children for the six-week session. Due to diminishing profits in the basketball program, they are considering eliminating the basketball program. Camp owner Mikey Matheny has asked you to review the income statement. Then you will need to determine the impact on profit from dropping the basketball program and make a recommendation. Field Hockey $50,000 $6,000 $44,000 Saints for Health Project Income Statement Total Basketball Lacrosse Camp Tuition $190,000 $75,000 $65,000 Variable Costs for Food and $26,000 $12,000 $8,000 Staff Contribution Margin $164,000 $63.000 $57,000 Fixed Expenses Equipment Rental - Traceable $25,000 $10,000 $7,500 Salaries of Sports Program $21,000 $10,000 $10,000 Directors Traceable Allocated Common Fixed $90,000 $43,200 $27.900 Expenses** Total Fixed Expenses $136.000 $63,200 $45,400 Net Operating Income (Loss) $28,000 ($200) $11,600 $7.500 $1,000 $18.900 $27.400 $16,600 Question 1 15 pts Assuming the Basketball Camp is dropped, what will be the new Net Operating Income (Loss) for Saints for Health Your answer should be in the form $99,99.99. Question 2 25 pts Assuming the Basketball Camp is dropped What is the impact on profit for Saints for Health and by how much? (Will it Increase? Decrease? or Stay the Same? And by how much?) Indicate what happens to profit and state the amount in the form $99,999.99 Question 4 30 pts What if the allocated fixed costs could be dropped by eliminating the camp nurse and camp maintenance worker who currently earn a total of $50,000? Write a memo to Mr. Matheny outlining your recommendation and your reasoning. Be sure to consider all of the stakeholders. Edit View Insert Format Tools Table 12ptv Paragraph v B IU 2 Tv