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Accountant & Financial In Business

Questions

1. Identify the services or programs to be included in the cost and profitability analysis.

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.

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.

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?

8. Discuss at least three alternatives for improving the overall profitability of the daycare facility.

 

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