ACCT 4220

What does the Petersburg office hope to achieve by opening the Alta Vista day-care center? In other words, what type of program has Mr. Schaefer planned, and why does he think it would benefit both the Petersburg office and Alta Vista?

2) What challenges does the company face in opening the day-care center? Where do the uncertainties lie? How could these individuals or organizations mitigate the challenges and uncertainties that you identify?

3) How would you describe the cost structure of the Alta Vista day-care center? In other words, what costs from Attachment A can be managed; can the center avoid any of the variable or fixed costs? What costs are missing from Attachment A, if any?

4) What is the break-even number of students needed to enroll without the administrative fee to the VOA office? Should the office charge this fee to the day-care center in the short term? In the long term? Is charging the fee consistent with the VOAs mission?

5) If the Alta Vista day-care center opens based on Mr. Schaefers current plan, do you predict that it will succeed or fail?

ACCT 4210 DAY CARE IN PUBLIC HOUSING Assignment: Dan Schaefer, executive director of the Petersburg, Va., office of the Volunteers of America (VOA), is eager for the board of directors to approve his plan to open a day-care center in the Alta Vista housing community. Mr. Schaefer believes this proposal is an ideal way to begin to rebuild Alta Vista. The Petersburg VOA helped to establish this community in 1971; unfortunately, the residents have seen a rise in criminal activity and a decrease in their quality of life. Although the board approves Mr. Schaefer's proposal at the end of the case, assume instead that he has hired you to analyze the proposal in preparation for the board meeting. Specifically, Mr. Schaefer wants you to do the following: Prepare a cost-volume-profit (CVP) analysis of the proposal's financial implications. Specifically, prepare an analysis that includes the projected revenue, variable costs, and fixed costs for enrollment levels of 20, 25, 30 and 37 students using the monthly projections in Attachment A of the case. Then, compute the weighted average contribution margin (CM) per student (computed as the total CM divided by the number of students enrolled) and the number of students that need to enroll at each of the four levels of enrollment for the center to break even. For this analysis, I have provided an Excel template in which I have already sorted variable and fixed costs; I have included the raw data. However, I have not included the formulas. Prepare a memorandum for Mr. Schaefer that includes: o the benefits and challenges of the Alta Vista day-care center project o an interpretation of the results of your CVP analysis o recommendations for Mr. Schaefer about what he should consider and/or do before the board meeting The following questions should guide you in the identification of important case issues. 1) What does the Petersburg office hope to achieve by opening the Alta Vista day-care center? In other words, what type of program has Mr. Schaefer planned, and why does he think it would benefit both the Petersburg office and Alta Vista? 2) What challenges does the company face in opening the day-care center? Where do the uncertainties lie? How could these individuals or organizations mitigate the challenges and uncertainties that you identify? 3) How would you describe the cost structure of the Alta Vista day-care center? In other words, what costs from Attachment A can be managed; can the center avoid any of the variable or fixed costs? What costs are missing from Attachment A, if any? 4) What is the break-even number of students needed to enroll without the administrative fee to the VOA office? Should the office charge this fee to the day-care center in the short term? In the long term? Is charging the fee consistent with the VOA's mission? 5) If the Alta Vista day-care center opens based on Mr. Schaefer's current plan, do you predict that it will succeed or fail? Requirements This is a group assignment. When making recommendations to Mr. Schaefer, be sure to provide enough explanation so that he can make an informed decision. Your recommendations to Mr. Schaefer should be no longer than three pages (single-spaced, font size 12 Microsoft Office document) excluding the CVP analysis. Besides a short introductory paragraph describing the purpose of the memorandum, suggested headers are: * Project benefits * Project challenges and uncertainties * CVP analyses and assessment * Recommendations Each group needs to submit your assignment electronically to me via email (mmajerczyk@gsu.edu) by 11:59 pm on 4/21/2016. Written materials related to the assignment will be graded for both content and writing style (i.e., grammar, appearance, spelling, etc.). In addition to the memorandum that contains your recommendations, you must also email me your CVP analysis in an Excel file. Page 1 of 2 ACCT 4210 Helpful Hints for Day Care in Public Housing Memo Assignment Avoiding 1st and 2nd person in the memo: You should not use first person (e.g., \"I\ Analysis of Financial Projections - With Given Case Data 20 Revenue: 2-3 year olds ($17 per day x 250/12 x 80%) 4-5 year olds ($16 per day x 250/12 x 80%) 5 year olds ($7 per day x 250/12 x 80%) Total revenue Variable costs: 8102 Educational supplies ($3 per student) 8103 Recreational supplies ($2 per student) 8105 Housekeeping supplies ($2 per student) 8201 Administrative expense (14% of total revenue) Total variable costs Contribution margin (CM) Fixed costs: 7000 Salaries, total 7103 Employee benefits 7201 FICA taxes 8001 Employee fees paid 8004 Staff development training 8005 Help wanted ads 8010 Membership in other organizations 8101 Medical/first aid kit supplies 8104 Food and beverage supplied by USDA 8106 Office supplies 8111 Telephone expense 8112 Postage 8401 Rent 8402 Equipment maintenance 8404 Mortgageote/loan interest 8406 Utilities, total 8501 General insurance 8502 Workmen's compensation 8601 Outside printing 8606 Subscriptions and publications 8702 Van maintenance/insurance/gas 8706 Staff mileage 9402 Miscellaneous expenses 9500 Depreciation Total fixed costs Total variable and fixed costs Operating profit (loss) Weighted average CM per student Number of students needed to break even Round up break-even students Total CM without administrative fee Weighted average CM per student w/o admin. fee Breakeven number of students w/o admin. fee Round up break-even students ---------- Total Number of Students ---------25 30 37 2,550 1,333 700 4,583 3,400 1,867 700 5,967 4,250 2,400 700 7,350 5,383 3,200 700 9,283 60 40 40 642 782 3,801 75 50 50 835 1,010 4,957 90 60 60 1,029 1,239 6,111 111 74 74 1,300 1,559 7,724 3,126 175 239 11 33 9 4 3 0 5 140 25 0 22 0 240 92 10 25 2 45 48 10 0 4,264 5,046 (463) 190.05 22.44 23 3,928 700 300 11 33 9 4 3 0 5 140 25 0 22 0 240 92 13 25 2 45 48 10 0 5,655 6,665 (698) 198.28 28.52 29 4,665 875 357 16 33 9 4 3 0 10 140 30 0 22 0 240 92 15 25 2 45 48 10 0 6,641 7,880 (530) 203.70 32.60 33 5,402 1,050 413 16 33 9 4 3 0 10 140 30 0 22 0 240 92 19 25 2 45 48 10 0 7,613 9,172 111 208.76 36.47 37 4,443 222.15 20.00 20.00 5,792 231.68 25.00 25.00 7,140 238.00 30.00 30.00 9,024 243.89 37.00 37.00