CASE ONE (24 Marks) : Douglas and Pamela Frank are a married couple. They both worked for a railroad company for 30 years. At age 57, Douglas and age 52, Pamela retired and moved to the small town of Ovilla, TX, which has a population of approximately 3,500 residents. When the Franks moved to the town, they decided to start a child care business in their home called Nannas House. Nannas House is licensed by the state. The state charges an annual fee of $225 to maintain the license. Insurance is required at a cost of $3,840 a nnually. The facility is licensed to care for a maximum of six children. The Franks charge a fee of $800 per month for each child. The monthly fee is based on a full day of care, from 8:00 a.m. to 4:00 p.m. If additional time is required beyond 4:00 p.m., parents must pay an additional charge of $15 per hour for each child. The couple provides two meals and a snack for the children. The cost of the meals and snack is $3.20 per child per day. There are six children currently enrolled. The facility is very nice. It is an 820 square foot addition to their home that was built in 1964. The Franks purchased the home and completed the renovations for $79,500 and they believe the addition has a useful life of 25 years. The facility has a large open space for play, reading, and other activities. There is a section for sleeping which contains small cots. The facility is equipped with a small kitchen, two bathrooms and a small laundry area. The daycare increased the Franks utility cost by $50 each month. During the first week of operations, the washer and dryer stopped working. Both appliances were old and had been used by the couple for many years. The old appliances cost a total of $440. While a laundry room was not initially a necessity, it became increasingly im portant for laundering the soiled clothes of the children, blankets, and sheets. A company nearby, Red Oak Laundry and Dry Cleaning, can launder clothing for the Franks, including pickup and delivery, for $52 per month. Alternatively, the Franks can take clothes to the laundromat once a week, which is three miles away (oneway). The applicable mileage rate is $0.56/mile. They can launder the clothes themselves at a cost of $8 per week. The selfservice alternative does not include detergent or fabric sheet s. The couple would need to purchase these items in order to use the laundromat. Purchasing laundry supplies in bulk from MegaMart would cost $35 every quarter. The final alternative is for the Franks to purchase a washer and dryer. The cost of the applian ces is washer $420 and dryer $380. The additional accessories for both appliances, needed for installation, cost $43.72. The store will deliver the appliances at a total cost of $35. The cost of installing the appliances is free. Both appliances are expect ed to last 8 years. According to the manufacturer, the washer will increase energy costs by $120 per year. The dryer will increase energy costs by $145 per year. The Franks need some assistance in decisionmaking and evaluation. They have contacted Emily S accountant, to provide some advice. The Franks will use straightmith, their line depreciation. For monthly calculations, use 4.33 weeks per month.) Case One Questions: 1. Consider the different types of costs discussed in this case. List the costs discussed in the case and provide one specific example of each. 2. Based on the information provided, what information is relevant to the decision to purchase the appliances? What information is irrelevant to the decision to purchase the appliances? Why? 3. What could it cost the couple to launder clothes? Show your detailed calculations for each.