please answer question 1-8 in detail. Thank you
coupled with Table 4 Tables 1-3 provide revenue and expense information for the first year of operations at the new facility. Tubles 4-6 provide additional information useful for the cost analysis and decision making Hourly Childcare Rates Intant care Toddler care Table 2 Operating Expenses Pre-K care Table 5 Square Footage ACDC School district Head Start TOTAL Accounting & legal Advertising Bank charges Continuing education Depreciation Food expense Ins-Bld/property Ins-Oficerband Ins. - Gen. Bability Ins-Workers com Interest expense Payroll - wages Payroll taxes Repairs & maintenance Sanitation Service Supplies - Cleaning Supplies - Programvart Supplies - Ofice Telephone 130RS 101.500 5.150 Waterswer TOTAL EXPENSES See detainable ACTIVITY-BASED COSTING-A QUICK REVIEW Activity-based costing (ABC) is used frequently in manufacturing settings because it typically improves product cost information. ABC replaces arbitrary cost allocations by first assigning costs to activities and then to goods based on how much each good uses the activities. The concepts of ABC can also be applied to service-based organizations where tangible products do not exist. In a service organization, costs are assigned to the various activities performed, cost drivers that measure the activities performed are identified, cost driver rates are calculated for each activity, and the resulting rates are used to assign activity costs to the types of services provided. This process reflects the causal relationship between the activity, the costs created by the activity, and the assignment of these costs to services. $175,950 Table 3 Revenues Tuition Intant care Toddler care Pre-K care $ 28,530 68,710 62.650 Rant 4200 School district Head Start TOTAL $120.450 IDENTIFICATION OF COST DRIVERS There are many activities present in a day care setting that create or drive costs. An example is the preparing and serving of food. It is relatively easy to assign many of the costs, such as food and direct labor, to this activity. It is more difficult. however, to assign costs to many of the most significant activities that occur regularly in a day care. These activities (like reading a book, playing a game, or teaching a skill) are key components of the service being provided shildcare but they are difficult to measure. Therefore, identifying cash of the individual activities that drive cost and then assigning cost to the daycare programs based on these activities may be cost prohibitive. For that reason, ACDC places activities into broad category classifications. When considering drivers that would be cost effective yet causally related to the costs IMA EDUCATIONAL CASE JOURNAL 4 VOL 3, NO. 4, ART. 3. DECEMBER 2010 Table 6 Population Total number of students enrolled Total stall employed average Average daily staffing of employees daily attendance of students populatiga ACDC Administrator Kitchen Infant care Toddler care Pre-K care School district Head Start Total NIN being incurred. population or a population subset becomes the driver identified for many of the activity cost pools. Population may be measured in terms of enrollment, class size, or number of staff. See Table 6. 7. Based upon your calculations in Question 6, which services or programs are operating successfully? What appears to be the determining factor in whether the service or program is profitable? QUESTIONS 8. Discuss at least three alternatives for improving the overall profitability of the daycare facility. 1. Identify the services or programs to be included in the cost and profitability analysis. REFERENCE LIST 2. Examine the costs listed in Table 2. a. Identify the direct costs associated with each service or program. b. Which costs would be organization-sustaining costs! Provide an argument for or against assigning these costs to services or programs. Helbum, S. W. Cost Ouality and Child Outcomes in Child Care Centers Technical Report. Denver, CO: Department of Economics, Center for Research in Economic and Social Policy, University of Colorado at Denver, 1995. Anderson, L. W. and D. R. Krathwohl. A Taxonomy for Learning. Traching, and Assessing: A Revision of Bloom's Taxonomy of Educational Objectives. NY: Longman, 2001. 3. Identify the broad activity categories and create cost pools by assigning the costs from Table 2 to the pools. 4. Identify the cost drivers that have a causal relationship to the activity cost pools created in Question 3. 5. Calculate the activity or cost-driver rates for each cost pool. Note: You should develop rates that will allocate costs to ACDC programs and/or tenants only. You should not allocate any costs back to general administration. 6. Using the services or programs identified in Question 1, determine service or program revenues, assign the costs to the service or programs, and calculate service or program profitability. A spreadsheet may be helpful with this task. ABOUT IMA With a worldwide network of more than 60.000 professionals, IMA is the world's leading organization dedicated to empowering accounting and finance professionals to drive business performance. IMA provides a dynamic forum for professionals to advance their careers through Certified Management Accountant (CMA) certification, research, professional education, networking and advocacy of the highest ethical and professional standards. For more information about IMA, please visit www.imanet.org. coupled with Table 4 Tables 1-3 provide revenue and expense information for the first year of operations at the new facility. Tubles 4-6 provide additional information useful for the cost analysis and decision making Hourly Childcare Rates Intant care Toddler care Table 2 Operating Expenses Pre-K care Table 5 Square Footage ACDC School district Head Start TOTAL Accounting & legal Advertising Bank charges Continuing education Depreciation Food expense Ins-Bld/property Ins-Oficerband Ins. - Gen. Bability Ins-Workers com Interest expense Payroll - wages Payroll taxes Repairs & maintenance Sanitation Service Supplies - Cleaning Supplies - Programvart Supplies - Ofice Telephone 130RS 101.500 5.150 Waterswer TOTAL EXPENSES See detainable ACTIVITY-BASED COSTING-A QUICK REVIEW Activity-based costing (ABC) is used frequently in manufacturing settings because it typically improves product cost information. ABC replaces arbitrary cost allocations by first assigning costs to activities and then to goods based on how much each good uses the activities. The concepts of ABC can also be applied to service-based organizations where tangible products do not exist. In a service organization, costs are assigned to the various activities performed, cost drivers that measure the activities performed are identified, cost driver rates are calculated for each activity, and the resulting rates are used to assign activity costs to the types of services provided. This process reflects the causal relationship between the activity, the costs created by the activity, and the assignment of these costs to services. $175,950 Table 3 Revenues Tuition Intant care Toddler care Pre-K care $ 28,530 68,710 62.650 Rant 4200 School district Head Start TOTAL $120.450 IDENTIFICATION OF COST DRIVERS There are many activities present in a day care setting that create or drive costs. An example is the preparing and serving of food. It is relatively easy to assign many of the costs, such as food and direct labor, to this activity. It is more difficult. however, to assign costs to many of the most significant activities that occur regularly in a day care. These activities (like reading a book, playing a game, or teaching a skill) are key components of the service being provided shildcare but they are difficult to measure. Therefore, identifying cash of the individual activities that drive cost and then assigning cost to the daycare programs based on these activities may be cost prohibitive. For that reason, ACDC places activities into broad category classifications. When considering drivers that would be cost effective yet causally related to the costs IMA EDUCATIONAL CASE JOURNAL 4 VOL 3, NO. 4, ART. 3. DECEMBER 2010 Table 6 Population Total number of students enrolled Total stall employed average Average daily staffing of employees daily attendance of students populatiga ACDC Administrator Kitchen Infant care Toddler care Pre-K care School district Head Start Total NIN being incurred. population or a population subset becomes the driver identified for many of the activity cost pools. Population may be measured in terms of enrollment, class size, or number of staff. See Table 6. 7. Based upon your calculations in Question 6, which services or programs are operating successfully? What appears to be the determining factor in whether the service or program is profitable? QUESTIONS 8. Discuss at least three alternatives for improving the overall profitability of the daycare facility. 1. Identify the services or programs to be included in the cost and profitability analysis. REFERENCE LIST 2. Examine the costs listed in Table 2. a. Identify the direct costs associated with each service or program. b. Which costs would be organization-sustaining costs! Provide an argument for or against assigning these costs to services or programs. Helbum, S. W. Cost Ouality and Child Outcomes in Child Care Centers Technical Report. Denver, CO: Department of Economics, Center for Research in Economic and Social Policy, University of Colorado at Denver, 1995. Anderson, L. W. and D. R. Krathwohl. A Taxonomy for Learning. Traching, and Assessing: A Revision of Bloom's Taxonomy of Educational Objectives. NY: Longman, 2001. 3. Identify the broad activity categories and create cost pools by assigning the costs from Table 2 to the pools. 4. Identify the cost drivers that have a causal relationship to the activity cost pools created in Question 3. 5. Calculate the activity or cost-driver rates for each cost pool. Note: You should develop rates that will allocate costs to ACDC programs and/or tenants only. You should not allocate any costs back to general administration. 6. Using the services or programs identified in Question 1, determine service or program revenues, assign the costs to the service or programs, and calculate service or program profitability. A spreadsheet may be helpful with this task. ABOUT IMA With a worldwide network of more than 60.000 professionals, IMA is the world's leading organization dedicated to empowering accounting and finance professionals to drive business performance. IMA provides a dynamic forum for professionals to advance their careers through Certified Management Accountant (CMA) certification, research, professional education, networking and advocacy of the highest ethical and professional standards. For more information about IMA, please visit www.imanet.org
