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, assumeinsteadthat he has hired you to analyze the proposal in preparation for the board meeting. Specifically, Mr. Schaefer wants you to do the following:Preparecost-volume-profit (CVP) analysis of the proposal's financial implications. Specifically, pprepare 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. 4)What is the break-even number of students needed to enrollwithoutthe 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?

D E G AB 20 25 30 37 3 Revenue: 2-3 year olds ($17 per day x 250/12 x 80%) 2,550 3,400 4,250 5,383 4-5 year olds ($16 per day x 250/12 x 80%) 1,333 1,867 2,400 3,200 5 year olds ($7 per day x 250/12 x 80%) 700 700 700 700 Total revenue 4,583 5,967 7,350 9,283 Variable costs: 10 8102 Educational supplies ($3 per student) 60 75 90 111 8103 Recreational supplies ($2 per student) 40 50 60 74 11 12 8105 Housekeeping supplies ($2 per student) 40 50 60 74 13 8201 Administrative expense (14% of total revenue) 642 835 1.029 ,300 14 Total variable costs 782 1,010 1,239 1,559 15 Contribution margin (CM) 3,801 4,957 6,111 7,724 16 Fixed costs: 17 7000 Salaries, total 3,126 3,928 4,665 5,402 18 7103 Employee benefits 175 700 875 1,050 19 7201 FICA taxes 239 300 357 413 8001 Employee fees paid 1 11 16 16 21 8004 Staff development training 33 33 33 33 22 8005 Help wanted ads 191 9 19 23 8010 Membership in other organizations 4 4 4 24 8101 Medical/first aid kit supplies 3 3 3 3 25 8104 Food and beverage supplied by USDA 26 8106 Office supplies 5 5 10 10 27 8111 Telephone expense 140 140 140 140 28 8112 Postage 25 25 30 30 29 8401 Rent 0 0 30 8402 Equipment maintenance 22 22 31 8404 Mortgageote/loan interest 0 0 32 8406 Utilities, total 240 240 33 240 8501 General insurance 92 240 92 92 34 8502 92 Workmen's compensation 10 35 8601 1 13 15 19 Outside printing 36 25 8606 Subscriptions and publications 2 25 25 25 37 8702 Van maintenance/insurance/gas 45 112 45 2 38 8706 Staff mileage 45 45 48 39 9402 Miscellaneous expenses 48 10 48 48 40 9500 Depreciation 10 0 10 10 41 Total fixed costs 0 0 0 42 Total variable and fixed costs 4,264 5,655 6,641 7,613 43 Operating profit (loss) 5,046 6,665 44 (463) 7,880 9,172 Weighted average CM per student (698) (530) 111 45 Number of students needed to break even 190.05 198.28 203.70 208.76 46 22.44 47 Round up break-even students 28.52 32.60 36.47 23 29 33 37 48 49 Total CM without administrative fee 4,443 50 Weighted average CM per student w/o admin. fee 5,792 Breakeven number of students w/o admin. fee 222.15 231.68 7,140 9,024 238.00 243.89 51 52 Round up break-even students 19.19 24.41 27.90 20 25 31.21 28 32 AltaVistaProjec