After getting their retirement pension, Mary and Joseph decided to open their own child care center which they called "Good Shepherd Center". The center is operating from $8$:$00$ am to $5$:$00$ pm from Monday to Friday. In case of emergency, parents may extend up to $7$:$00pm$ with an additional charge. The center charges a fee of Peso $5,000$ per month for each child. Parents will pay an additional fee of Peso $50$ per hour for each child if they are staying beyond $5$:$00pm.$

The following costs are incurred in the operation of the child center:

Annual property insurance of Peso $30,000.$

The couple purchased the home at Peso $2,000,000$ and made improvements of Peso $1,000,000.$ Annual depreciation expense is determined at Peso $125,000$ for an estimated useful life of $20$ years.

The center provides lunch and two $($morning and afternoon$)$ snacks for the children. The cost of the meal and snack is Peso $100$ per child. The center has currently $10$ children as regular customers per day.

The center employed one staff with a daily rate of Peso $350.$ Mary and Joseph are also actively involved in managing the center. Use $255$ working days in a year.

The utility costs when the center if not operational is at Peso $300.$ Average utility costs per month during the first year of operation is at Peso $3,000.$

The cost of writing and drawing materials per child on a monthly basis is at Peso $50.$

The washer and dryer stop functioning within the first week of operation. Both appliances were outdated and had been in the couple's possession for a long time. The old appliances cost P$40,000$ in total. While a laundry room was not initially required, it grew increasingly vital as the children's dirty clothes, blankets, and sheets became more stained.

For Peso $3,000$ per month, a neighboring company can clean garments for the facility, including pick$-$up and delivery.

Alternatively, the Good Shepherd can take their clothing to a three$-$mile$-$away laundromat once a week $($one way$).$ Peso $40$ per mile is the applicable mileage rate. They can do their own laundry at a cost of Peso $500$ per week. Use $52$ weeks in a year. Detergent and fabric sheets are not included in the self$-$service option. To utilize the laundromat, the couple would need to purchase these items. Sunshine Supermart's bulk washing products would set you back Peso $2,000$ every quarter.

The facility could also buy a washer and dryer as a last resort. The appliances are priced at Peso $15,000$ for the washer and Peso $30,000$ for the dryer. Additional accessories for the dryer costs Peso $2,000($this is capitalizable as cost of the appliance$).$ The installation of the appliances is free. Both appliances should last at least $5$ years. The washer, according to the maker, will boost annual energy costs by Peso $5,000.$ The dryer will result in a Peso $10,000$ rise in energy bills per year.

The center needs some assistance in decision making and evaluation. They have contacted their accountant to provide some advice.

Requirements:

Identify the type of costs for each of the costs discussed in the case. $(10$ points$)$

$\backslash$table$[[,$Type of Costs$],[,\backslash$table$[[$In relation to$],[$volume of activity$],[($Variable$,$ Fixed$],[$or Semi$-$Variable$)]],\backslash$table$[[$In relation to the$],[$product$/$service$],[($Direct Materials,$],[$Direct Labor or$],[$Factory Overhead$)]]],[1.$ Annual property insurance of $P30,000.,,],[\backslash$table$[[2.$ Annual depreciation expense is determined at$],[$P$125,000$ for an estimated useful life of $20$ years.$]],,],[\backslash$table$[[3.$ The center provides lunch and two snacks $($morning$],[$and afternoon$)$ for the children. The cost of the meal$],[$and snack is P$100$ per child. The center has currently $10],[$children as regular customers per day.$]],,],[\backslash$table$[[4.$ The center employed once staff with a daily rate of$],[$P$350.]],,],[\backslash$table$[[5.$ The utility costs when the center is not yet$],[$operational is at P$300.$ Average utility costs per$],[$month during the first year of operation is at $P3,000.]],,]]$

If you are the accountant, what alternative will you select for the laundry needs of the center. Show your supporting computations $($ in an annual basis$)$ for a$)$ Self$-$serve laundry b$)$ Pickup$/$Delivery Service c$)$ Purchase Appliances $(10$ points$)$

Compute for the Net Income$/$Loss of the center assuming they will do self$-$serve laundry. Assume that there is no parent who availed of the extended hours during the year. $(10$ points$)$

Compute for the Return on Investment $($ROI$)$ of the center using the Net Income determined in requirement no$.4.$ Based on computed ROI, do you think the retired couple's investment in the facility is a worthwhile one? $(5$ points$)$

The center has a wait list. They can hire another employee for a daily salary similar to that of the existing employee. With the additional employee, the center can accept three additional children. Should the center hire the additional employee? Why? Show you