Young School for Wee People accounting
Young School for Wee People Introduction Young School for Wee People (YSWP) had been running a smal, for-profit preschool program for young children between the ages of two and four for several decades. YSWP was one of several privately run programs in the suburban Philadelphia area. For each of the three groups i., two, three- and four year olds, there were two classes per day for a total of six classes s in the facility each day. The classes were held both in the morning and in the afternoon five days a week between September and June, there were approximately 200 days 140 weeksi. or 1,200 class meetings, per year. Only about one-third of YSWP's local competitors offered classes during the summer months. The morning classes ran from 9:00 am to noon, and the afternoon meetings ran from 1:00p.m. to 4:00p.m. Lunch was not served in other class. However, each class served a snack to the children. Class size varied from nine to 15 students per class. Although there was a lot of pressure from parents to reduce class sizes, a recent article in an industry newsletter showed that.glven Current demographics, the market for such programs could increase by 10% a year for the next five years. The year before, a parent suggested that the school begin hosting birthday parties on the weekend. Since YSWP's three classrooms were empty during this time, it seemed like a good use of the space and could generate additional revenue. Over the past year, the school had managed to quickly build a sizable side business hosting birthday parties. Approximately 150 parties were held in the school's three classrooms on Saturdays and Sundays throughout the year. The parties were typically attended by 10-20 children and ran for approximately four hours. The four hour running time included the time necessary to set up and clean up the facility. For this service, the school's main competitors consisted of children's gyms, arts and crafts stores, and museums. Each had been offering specialized birthday parties for many years and charged very high prices. As a result, YSWP was able to significantly underprice these other firms while maintaining a very high profit margin. In fact, due to the success of the birthday parties over the past year, YSWP wanted to expand this business. YSWP was considering switching the bulk of its advertising campaign from one that was designed to build general awareness of the school to one that was specifically directed at promoting the birthday party business Each day there was a moming class and an aon ci for two-year old, another morning and moon class for three years, and morning and moon class for four years Current Cost System YSWP's largest expense was related to the building (see Exhibit for an income statement YSWP had initially purchased a single family home and converted it to a daycare/schoolhouse setting. The house cost $400.000, including $50.000 for the necessary renovations and license applications. Building related expenses included depreciation, utilities, maintenance, cleaning. property taxes, and so forth. Traditionally, these costs were assigned to the classes on a per class-meeting basis. The building related costs had not significantly changed since the introduction of the birthday party business. Therefore, no building related costs had been assigned to the new product Salaries, supplies and food were also allocated based on the meeting, where a meeting was either a single class meeting for three hours or a single birthday party for four hours. The actual cost of supplies and food for all of last year's birthday parties was $3,000, the actual cost for the preschool classes was approximately $18,000. YSWP had five employees--three full time and two part time. The school's director earned $50.000 taught two of the preschool classes each day, and administered both the preschool and the birthday party programs. She spent approximately 20% of her time in administration evenly split between the two programs. The remaining two full-time employees earned $20,000 per year and taught the other four daycare and teaching experience, the time teachers each had eaching experience, and the partie downpment or adication As advertising was used to build in the community and affected bon products, it was not allocated to other pro Pricing YSWP charged 5200 for each birthday party regardless of how many children attended and averaged a total of about $270 for each preschool classes depending on the me suderts in the class. The wanneer over focal per 2000, when preschool charges Khaled only $340 per classesion even though everage classe declined from 2010 Further Changes Currently, the children's day was split up between two-hour commandane how ete. The clectivemed to bring new ideas and teaching styles into the However YSWP Belvedere core con la incing alone in the Olden. This method had been succes in preparing children for the move to kindergarten Additionally, the elective had not be con permetting to eaching styles and ideas in fact, the elective and become merely andersion of the com classCan YSWP planned to abolish the elective case and only for the standard Additionally, YSW w cidering purchasing a borhood school. As part of the expansion, YSWP's director would have more administrative posibility. She hadd another teacher to cover here well as two administrative is the Question 1. Compute the cost of a single preschool class and age birthday party on the current Questions 1. Compute the cost of a single chocs and anglebirthday party in the cut 2. Would you recommend that YSWP continue to locate the building costs y te the preschool program Wateive allocation method would you say your were consideration of excess capably discuted in Question below the www. Please discute any additional information that you tell needed 2. For three months each year Get the school buildings the birthday parties. This represents approximately 60 days. 300 din could beren but not. How should ywccount for com.cy on why you recommend this method 4. Do you agree with YSWPsalocation method forres, and the or? Be specific about an alternative allocation methods that you would conside 5. Do you agree with YSWP on not to allocate the cost of advertising why ry mote cite about any heative allocation methods that you would come & Compute the cost per class meeting and per day party under the autions that you 7. How could YSWP The information from the evidentomation to enhance & Briefly explain the change in the average revenues per caso between last year and this year. What the information Would you recommend that YSP proceed with an expansion is the pros and cost making such a change along with the underlying mening 10. The board has an increased concem about maintaining control of Spade Until now. It has not ned a forma control yster what control and you suggest that station Be sure to clearly explain your answer through Young School for Wee People for the rindadure 3,200 $216.000 17.000 Young School for Wee People Introduction Young School for Wee People (YSWP) had been running a smal, for-profit preschool program for young children between the ages of two and four for several decades. YSWP was one of several privately run programs in the suburban Philadelphia area. For each of the three groups i., two, three- and four year olds, there were two classes per day for a total of six classes s in the facility each day. The classes were held both in the morning and in the afternoon five days a week between September and June, there were approximately 200 days 140 weeksi. or 1,200 class meetings, per year. Only about one-third of YSWP's local competitors offered classes during the summer months. The morning classes ran from 9:00 am to noon, and the afternoon meetings ran from 1:00p.m. to 4:00p.m. Lunch was not served in other class. However, each class served a snack to the children. Class size varied from nine to 15 students per class. Although there was a lot of pressure from parents to reduce class sizes, a recent article in an industry newsletter showed that.glven Current demographics, the market for such programs could increase by 10% a year for the next five years. The year before, a parent suggested that the school begin hosting birthday parties on the weekend. Since YSWP's three classrooms were empty during this time, it seemed like a good use of the space and could generate additional revenue. Over the past year, the school had managed to quickly build a sizable side business hosting birthday parties. Approximately 150 parties were held in the school's three classrooms on Saturdays and Sundays throughout the year. The parties were typically attended by 10-20 children and ran for approximately four hours. The four hour running time included the time necessary to set up and clean up the facility. For this service, the school's main competitors consisted of children's gyms, arts and crafts stores, and museums. Each had been offering specialized birthday parties for many years and charged very high prices. As a result, YSWP was able to significantly underprice these other firms while maintaining a very high profit margin. In fact, due to the success of the birthday parties over the past year, YSWP wanted to expand this business. YSWP was considering switching the bulk of its advertising campaign from one that was designed to build general awareness of the school to one that was specifically directed at promoting the birthday party business Each day there was a moming class and an aon ci for two-year old, another morning and moon class for three years, and morning and moon class for four years Current Cost System YSWP's largest expense was related to the building (see Exhibit for an income statement YSWP had initially purchased a single family home and converted it to a daycare/schoolhouse setting. The house cost $400.000, including $50.000 for the necessary renovations and license applications. Building related expenses included depreciation, utilities, maintenance, cleaning. property taxes, and so forth. Traditionally, these costs were assigned to the classes on a per class-meeting basis. The building related costs had not significantly changed since the introduction of the birthday party business. Therefore, no building related costs had been assigned to the new product Salaries, supplies and food were also allocated based on the meeting, where a meeting was either a single class meeting for three hours or a single birthday party for four hours. The actual cost of supplies and food for all of last year's birthday parties was $3,000, the actual cost for the preschool classes was approximately $18,000. YSWP had five employees--three full time and two part time. The school's director earned $50.000 taught two of the preschool classes each day, and administered both the preschool and the birthday party programs. She spent approximately 20% of her time in administration evenly split between the two programs. The remaining two full-time employees earned $20,000 per year and taught the other four daycare and teaching experience, the time teachers each had eaching experience, and the partie downpment or adication As advertising was used to build in the community and affected bon products, it was not allocated to other pro Pricing YSWP charged 5200 for each birthday party regardless of how many children attended and averaged a total of about $270 for each preschool classes depending on the me suderts in the class. The wanneer over focal per 2000, when preschool charges Khaled only $340 per classesion even though everage classe declined from 2010 Further Changes Currently, the children's day was split up between two-hour commandane how ete. The clectivemed to bring new ideas and teaching styles into the However YSWP Belvedere core con la incing alone in the Olden. This method had been succes in preparing children for the move to kindergarten Additionally, the elective had not be con permetting to eaching styles and ideas in fact, the elective and become merely andersion of the com classCan YSWP planned to abolish the elective case and only for the standard Additionally, YSW w cidering purchasing a borhood school. As part of the expansion, YSWP's director would have more administrative posibility. She hadd another teacher to cover here well as two administrative is the Question 1. Compute the cost of a single preschool class and age birthday party on the current Questions 1. Compute the cost of a single chocs and anglebirthday party in the cut 2. Would you recommend that YSWP continue to locate the building costs y te the preschool program Wateive allocation method would you say your were consideration of excess capably discuted in Question below the www. Please discute any additional information that you tell needed 2. For three months each year Get the school buildings the birthday parties. This represents approximately 60 days. 300 din could beren but not. How should ywccount for com.cy on why you recommend this method 4. Do you agree with YSWPsalocation method forres, and the or? Be specific about an alternative allocation methods that you would conside 5. Do you agree with YSWP on not to allocate the cost of advertising why ry mote cite about any heative allocation methods that you would come & Compute the cost per class meeting and per day party under the autions that you 7. How could YSWP The information from the evidentomation to enhance & Briefly explain the change in the average revenues per caso between last year and this year. What the information Would you recommend that YSP proceed with an expansion is the pros and cost making such a change along with the underlying mening 10. The board has an increased concem about maintaining control of Spade Until now. It has not ned a forma control yster what control and you suggest that station Be sure to clearly explain your answer through Young School for Wee People for the rindadure 3,200 $216.000 17.000
