QUESTION 1 (50 points) Little Annie runs a dance studio with childcare and adult fitness classes. Annie's budget for the upcoming year is as follows: Little Annie's Dance Studio Budgeted Costs and Activities For the Year Ended 30 June, 2013 $ 62,100 24,300 39,060 $ Dance teacher salaries Child care teacher salaries Fitness instructor salaries Total salaries Supplies (art, dance accessories, fitness) Rent, maintenance, and utilities Administration salaries Marketing expenses Total 125,460 21,984 97,511 50,075 21,000 316,030 $ Supplies and administration salaries are costs required to service Little Annie's members and customers. Other budget information includes: Dance Childcare Fitness Total Square footage 6,000 3,150 2,500 11.650 Number of participants 1,485 270 2,205 Teachers per hour 3 3 Number of advertisements 26 24 20 70 450 Required: a. Determine which costs are direct costs and which costs are indirect costs of each of the three program. (5 points) b. Choose a cost driver for each pool of indirect costs and calculate the budgeted cost per unit of the cost driver for each pool. You may use a cost driver more than once. (15 points) Calculate the budgeted cost per participant of each program. (20 points) d. How can Little Annie use this information for pricing? What other factors should she consider? (10 points) QUESTION 1 (50 points) Little Annie runs a dance studio with childcare and adult fitness classes. Annie's budget for the upcoming year is as follows: Little Annie's Dance Studio Budgeted Costs and Activities For the Year Ended 30 June, 2013 $ 62,100 24,300 39,060 $ Dance teacher salaries Child care teacher salaries Fitness instructor salaries Total salaries Supplies (art, dance accessories, fitness) Rent, maintenance, and utilities Administration salaries Marketing expenses Total 125,460 21,984 97,511 50,075 21,000 316,030 $ Supplies and administration salaries are costs required to service Little Annie's members and customers. Other budget information includes: Dance Childcare Fitness Total Square footage 6,000 3,150 2,500 11.650 Number of participants 1,485 270 2,205 Teachers per hour 3 3 Number of advertisements 26 24 20 70 450 Required: a. Determine which costs are direct costs and which costs are indirect costs of each of the three program. (5 points) b. Choose a cost driver for each pool of indirect costs and calculate the budgeted cost per unit of the cost driver for each pool. You may use a cost driver more than once. (15 points) Calculate the budgeted cost per participant of each program. (20 points) d. How can Little Annie use this information for pricing? What other factors should she consider? (10 points)
