The Happy Toddlers (THT) is a preparatory school for children three to five years old. There are ten teachers employed by THT: five senior teachers with a salary of P30,000 a month and five junior teachers at P18,000 a month. There are also four administrators with average monthly salary of P35,000. Annual depreciation for furniture and fixtures amounted to P100,000. Utilities starting operation totals P200,000. Required: Examine and list down the expenses of THT as of December 31 by nature. Which type of expense is the highest and lo

The Happy Toddlers (THT) is a preparatory school for children three to five years old. There are ten teachers employed by THT: five senior teachers with a salary of P30,000 a month and five junior teachers at P18,000 a month. There are also four administrators with average monthly salary of P35,000. Annual depreciation for furniture and fixtures amounted to P100,000. Utilities starting operation totals P200,000. Required: Examine and list down the expenses of THT as of December 31 by nature. Which type of expense is the highest and lo

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter17: Activity Resource Usage Model And Tactical Decision Making

Section: Chapter Questions

Problem 26P: St. Johns Medical Center (SJMC) has five medical technicians who are responsible for conducting...

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The Happy Toddlers (THT) is a preparatory school for children three to five years old. There are ten teachers employed by THT: five senior teachers with a salary of P30,000 a month and five junior teachers at P18,000 a month. There are also four administrators with average monthly salary of P35,000. Annual depreciation for furniture and fixtures amounted to P100,000. Utilities starting operation totals P200,000.Required:Examine and list down the expenses of THT as of December 31 by nature. Which type of expense is the highest and lowest?If the owner of THT consulted you on minimizing expenses and maximizing profit, what would you recommend?
The Happy Toddlers (THT) is a preparatory school for children three to five years old. There are ten teachers employed by THT: five senior teachers with a salary of P30, 000 a month and five junior teachers at P18, 000 a month. There are also four administrators with average monthly salary of P35, 000. Anual depreciation for furniture and fixtures amounted to P100, 000. Utilities starting operation totals P200, 000. Examine and list down the expenses of THT as of December 31 by nature. Which type of expense is the highest or lowest? If the owner of THT consulted you on minimizing expenses and maximizing profit, what would you recommend?
The Happy Toddlers (THT) is a preparatory school for children three to five years old. There are ten teachers employed by THT: five senior teachers with a salary of P30, 000 a month and five junior teachers at P18, 000 a month. There are also four administrators with average monthly salary of P35, 000. Anual depreciation for furniture and fixtures amounted to P10, 000. Utilities starting operation totals P200, 000. Examine the list down the expenses of THT as of December 31 by nature. Which type of expenses is the highest or lowest? If the owner of THT consulted you on minimizing expenses and maximizing profit, what would you recommend?
St. Johns Medical Center (SJMC) has five medical technicians who are responsible for conducting cardiac catheterization testing in SJMCs Cath Lab. Each technician is paid a salary of 36,000 and is capable of conducting 1,000 procedures per year. The cardiac catheterization equipment is one year old and was purchased for 250,000. It is expected to last five years. The equipments capacity is 25,000 procedures over its life. Depreciation is computed on a straight-line basis, with no salvage value expected. The reading of the catheterization results is conducted by an outside physician whose fee is 120 per test. The technicians report with the outside physicians note of results is sent to the referring physician. In addition to the salaries and equipment, SJMC spends 50,000 for supplies and other costs needed to operate the equipment (assuming 5,000 procedures are conducted). When SJMC purchased the equipment, it fully expected to perform 5,000 procedures per year. In fact, during its first year of operation, 5,000 procedures were run. However, a larger hospital has established a clinic in the city and will siphon off some of SJMCs business. During the coming years, SJMC expects to run only 4,200 cath procedures yearly. SJMC has been charging 850 for the procedureenough to cover the direct costs of the procedure plus an assignment of general overhead (e.g., depreciation on the hospital building, lighting and heating, and janitorial services). At the beginning of the second year, an HMO from a neighboring community approached SJMC and offered to send its clients to SJMC for cardiac catheterization provided that the charge per procedure would be 550. The HMO estimates that it can provide about 500 patients per year. The HMO has indicated that the arrangement is temporaryfor one year only. The HMO expects to have its own testing capabilities within one year. Required: 1. Classify the resources associated with the cardiac catheterization activity into one of the following: (1) committed resources, or (2) flexible resources. 2. Calculate the activity rate for the cardiac catheterization activity. Break the activity rate into fixed and variable components. Now, classify each activity resource as relevant or irrelevant with respect to the following alternatives: (1) accept the HMO offer, or (2) reject the HMO offer. Explain your reasoning. 3. Assume that SJMC will accept the HMO offer if it reduces the hospitals operating costs. Should the HMO offer be accepted? 4. Jerold Bosserman, SJMCs hospital controller, argued against accepting the HMOs offer. Instead, he argued that the hospital should be increasing the charge per procedure rather than accepting business that doesnt even cover full costs. He also was concerned about local physician reaction if word got out that the HMO was receiving procedures for 550. Discuss the merits of Jerolds position. Include in your discussion an assessment of the price increase that would be needed if the objective is to maintain total revenues from cardiac catheterizations experienced in the first year of operation. 5. Chandra Denton, SJMCs administrator, has been informed that one of the Cath Lab technicians is leaving for an opportunity at a larger hospital. She met with the other technicians, and they agreed to increase their hours to pick up the slack so that SJMC wont need to hire another technician. By working a couple hours extra every week, each remaining technician can perform 1,050 procedures per year. They agreed to do this for an increase in salary of 2,000 per year. How does this outcome affect the analysis of the HMO offer? 6. Assuming that SJMC wants to bring in the same revenues earned in the cardiac catheterization activitys first year less the reduction in resource spending attributable to using only four technicians, how much must SJMC charge for a procedure?
To open a clothing repair shop, you need to carry out the following expenses: purchase of raw materials and materials - 50 thousand UAH. per year, the cost of equipment - 200 thousand UAH. (service life - 10 years), rental of premises - 3 thousand UAH. monthly, salary of employees - UAH 8.4 thousand. monthly, electricity - 18 thousand UAH. in year. For the amount of funds invested in production, it would be possible to receive an income of 7% per annum, as well as receive wages in a similar production - 30 thousand UAH. in year. Calculate accounting, economic and normal profit if the total income of the enterprise is 550 thousand UAH. in year
A company rents a small building with 10,000 square feet of space for $100,000 per year. The rent is allocated to the company's three departments on the basis of the value of the space occupied by each. Department 1 occupies 1,500 square feet of ground-floor space, Department 2 occupies 3,500 square feet of ground-floor space, and Department 3 occupies 5,000 square feet of second-floor space. If rent for comparable floor space in the neighborhood averages $15.00 per sq. ft. for ground-floor space and $10 per sq. ft. for second-floor space, what annual rent expense should be charged to each department? Edit Format Table
A University produces two courses for its Management students this year. MATA32 and MATA33. Each student taking MATA32 requires 6 hours of teaching, 2 hours of adminis- tration, with a revenue of $1300. Each student taking MATA33 requires 7 hours of teaching, 1 hour of administration with a revenue of $1700. Due to the University's resources, there is a maximum of 2010 teaching hours and 150 administration hours. The University must also admit at least 30 MATA32 and at least 30 MATA33 students due to government regulation. What is the maximum revenue? (A) 90000 (B) 129000 (C) 188000 (D) 192500 (E) None of the above
Lerner College, a not-for-profit liberal arts college, charges the total cost of running its research library to its three academic programs: the humanities, the social sciences, and the sciences. Rent and utilities for the library space costs $30,000 per month. Salaries for the library’s employees total $275,000 per year, plus an additional 24% for benefits. The depreciation on the library's office equipment is $32,000 each year. Other library expenses – including supplies, books, subscriptions – are equal to $14,000 per month. The total cost of running the research library is allocated to each of the three academic programs based on the number of students in each of the three programs. The humanities program has 440 students; the social sciences program has 390 students; the sciences program has 260 students. The teaching staff for the social sciences program earns $650,000 per year in salaries and benefits. In addition, the social sciences program consumes $9,500 of supplies each…
John’s Publishing Company, a new service that writes term papers for college students, provides 11-page term papers from a list of more than 500 topics. Each paper will cost $7.50 and is written by a graduate in the topic area. John’s will pay $20,000 for the rights to all of the manuscripts. In addition, each author will receive $0.50 in royalties for every paper sold. Marketing expenses are estimated to be a total of $20,000 divided equally between Years 1 and 2, and John’s cost of capital is 11 percent. Sales are expected as follows: a. What are the ethical implications of this investment?
All Business Ltd. Is setting up a truck rental operation. They purchase ten trucks for a total of $950,000. In year 3, they buy two more trucks for $200,000. In year 5, they sell three trucks for $100,000 and buy four new trucks for $425,000. In year 6, they sell three trucks for $85,000. These trucks belong to CCA Class 16 (CCA rate of 40%). Calculate the CCA and UCC for the six years for this pool of trucks
John’s Publishing Company, a new service that writes term papers for college students, provides 11-page term papers from a list of more than 500 topics. Each paper will cost $7.50 and is written by a graduate in the topic area. John’s will pay $20,000 for the rights to all of the manuscripts. In addition, each author will receive $0.50 in royalties for every paper sold. Marketing expenses are estimated to be a total of $20,000 divided equally between Years 1 and 2, and John’s cost of capital is 11 percent. Sales are expected as follows: a. What is the payback period for this investment? Its NPV? Its IRR? b. What are the ethical implications of this investment?
At Little Green Apple Produce the owner is considering buying a new large walk in cooler for fruits and vegetables. The new cooler cost $150,000. The annual maintenance cost will be $7,000 starting in year two (the first year will be covered under warrantee). An additional employee will be needed to stock the cooler. The employee will make $16/hr, and start part-time at 20 hours per week. Sale of produce will increase by $100,000 in year one and an additional 10% in year two and 15% in year three. The cost of produce will increase $30,000 in year one and is variable with sales. The part-time employees hours will vary based on additional sales in years two and three. The employee will receive raises of 4% annually and electricity will increase 3% a year. There is no inflation on any other item. Based on this information prepare a pro forma and calculate the project NPV using a 9% discount rate/hurdle rate and calculate the IRR. State if the project should be expected or rejected.…