Appaloosa County Day Care Center, Inc.
Appaloosa County Day Care Center, Inc.
1. Identify the services or programs to be included in the cost and profitability analysis.
Infant childcare
Toddler childcare
Pre-K childcare
Rent-school district
Rent-head start
2. Examine the costs listed in Table 2.
a. Identify the direct costs associated with each service or program.
Labor cost is associated with each service and program. Food cost is associated to the kitchen area but indirect to the end services.
b. Which costs would be organization-sustaining costs? Provide an argument for or against assigning these costs to services or programs.
Organization-sustaining costs include depreciation, building insurance and interest expense on mortgage debt. Both ACDC and tenant use the facility and should participate in the cost associated with acquiring the space.
3. Identify the broad activity categories and create cost pools by assigning the costs from Table 2 to the pools.
Occupancy Cost- Indirect
Employee Support cost
General and administrative cost
Program support cost
Occupancy cost- Building Usage
Wage Expenses- Direct
4. Identify the cost drivers that have a causal relationship to the activity cost pools created in Question 3.
Cost Pool
Cost Driver
Occupancy costs-indirect
Square footage
Employee support costs
Number of ACDC program employees
General and administrative costs
Total number of children enrolled
Program support cost
Total daily population at ACDC
Occupancy costs- Building usage
Total daily population in building
Wages expenses- Direct
Number of employees assigned to rooms
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.
Cost pool
Total cost
Driver capacity
Activity rate
Occupancy- Indirect
$25,745
$8,000
$3.22
Employee costs
850
12
70.83
General and
1. Identify the services or programs to be included in the cost and profitability analysis.
Infant childcare
Toddler childcare
Pre-K childcare
Rent-school district
Rent-head start
2. Examine the costs listed in Table 2.
a. Identify the direct costs associated with each service or program.
Labor cost is associated with each service and program. Food cost is associated to the kitchen area but indirect to the end services.
b. Which costs would be organization-sustaining costs? Provide an argument for or against assigning these costs to services or programs.
Organization-sustaining costs include depreciation, building insurance and interest expense on mortgage debt. Both ACDC and tenant use the facility and should participate in the cost associated with acquiring the space.
3. Identify the broad activity categories and create cost pools by assigning the costs from Table 2 to the pools.
Occupancy Cost- Indirect
Employee Support cost
General and administrative cost
Program support cost
Occupancy cost- Building Usage
Wage Expenses- Direct
4. Identify the cost drivers that have a causal relationship to the activity cost pools created in Question 3.
Cost Pool
Cost Driver
Occupancy costs-indirect
Square footage
Employee support costs
Number of ACDC program employees
General and administrative costs
Total number of children enrolled
Program support cost
Total daily population at ACDC
Occupancy costs- Building usage
Total daily population in building
Wages expenses- Direct
Number of employees assigned to rooms
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.
Cost pool
Total cost
Driver capacity
Activity rate
Occupancy- Indirect
$25,745
$8,000
$3.22
Employee costs
850
12
70.83
General and