Middlehurst House Complete: Case 9A (Middlehurst House) In this case, management is presented with several decision options. For this assignment, you are required to provide a two to three...

Running Head: Analysis of Case 9A (Middlehurst House)
Analysis of Case 9A (Middlehurst House)
Student Name:
Student ID:
19th April 2019
To: Mr. Bill Compton, Owne
Mr. George Friedman, Owner, Directo
From: Heather Ford, Accounting Department
Date: April 19, 2019
Subject: Analysis related to change in operations
I receive for the request for the analysis of your suggestion change related to operation, class size and tuition fees. Moreover, the daycare center and preschool always focus to operate at full of capacity as this is how the centers are most profitable. The memo focused on various options and the recommendation for your centre.
Cu
ent Center Data:
    Class
    Number of Students
    2 years to 3 years old
    20 students
    3 years to 4 years old
    15 students
    4 years to 5 years old
    15 students
    5 years to 6 years old
    30 students
    Total:
    
    6 classes
    80 students
Expenses for Octobe
    Instructors (Salaries)
    $9,600
    Director (Salaries)
    $2,000
    Part-time cook (Salaries)
    $900
    Food Expenses
    $2,200
    Staff benefit expenses
    $2,450
    Supplies expenses
    $600
    Occupancy and other administrative expenses
    $3,250
    Total Expenses
    $21,000
Required Increase in the tuition decrease size of class:
    Class
    Raise
    Increase
    2 years to 3 years old
    61%
    $196
    3 years to 4 years old
    47%
    $131
    4 years to 5 years old
    47%
    $131
    5 years to 6 years old
    25%
    $65
    Total
    
    $523
Solution-1a
Instructors salaries = $2,600*2 Instructors
Instructors salaries = $3,200
Staffing benefits = ($3,200*.10) + (2 Instructors *$200)
Staffing benefits = $720
Incremental costs = Instructors salaries + Staffing benefits
Incremental costs = $3,200 + $720
Incremental costs = $3,920
Instructors salaries = $1,600*1 Instructors
Instructors salaries = $1,600
Staffing benefits = ($1,600*.10) + (1 Instructors *$200)
Staffing benefits = $360
Incremental costs = Instructors salaries + Staffing benefits
Incremental costs = $1,600 + $360
Incremental costs = $1,960
According to the above analysis, the class that will be more feasible to create from the waiting list will be the 5 years to 6 years old class. After analysis of the revenue and expense of the overall group it has been calculated that this is more profit available in this area. In order to determine the customer profitability the costing to serve together with the segmented revenue must first be determined. It is not a good business decision to turn the classroom small.
Solution-1
Incremental revenue = $260*10 students
Incremental revenue = $2,600
Instructor salary = $1,600
Staff benefits = (.10*$1,600) + ($200)
Staff benefits = $360
Food = ($1.25*10 students*22 days)
Food = $275
Variable supplies = ($1*10)
Variable supplies = $10
Total - $3,345 (Incremental profitability $355)
Solution-1c
Increased fees for the older students:
Ages:
2 years to 3 years old = ($196*20)
2 years to 3 years old = $3,920
3 years to 4 years old = ($130.67*15)
3 years to 4 years old = $1,960
5 years to 6 years old = ($65.33*30)
5 years to 6 years old = $1,960
New Students
Ages:
2 years to 3 years old = $516*5
2 years to 3 years old = $2,580
3 years to 4 years old = ($410.67*1)
3 years to 4 years old = $410
4 years to 5 years old = ($410.67*1)
4 years to 5 years old = $410
5 years to 6 years old = ($325.33*10)
5 years to 6 years old = $3,253
Total incremental revenue = $16,453
Less: Incremental costs
Instructors = 7*$1,600
Instructors = $11,200
Staff benefits = (.10*$11,200) + $1,400
Staff benefits = $2,520
Food = ($1.25*7*22 days)
Food = $468
Variable Supplies = ($1*17)
Variable Supplies = $17
Total Incremental Costs = $14,205
Incremental Profit = ($16,453-$14,205)
Incremental Profit = $2,250
Solution-1d
Incremental Revenue = $516*5
Incremental Revenue = $2,580
Instructors = $1,600
Staff benefits = (.10*$1,600 + 200)
Staff benefits = $360
Variable Supplies = ($1*5)
Variable Supplies = $5
Total= $1,965
Incremental profit = $615
If the tuition costing is similar for an infant class at the center it will help by
inging the revenue of $615 to add to the company net worth.
If you have any questions or concerns, please feel free to contact.
Sincerely,
-----
References:
Taschner, A., & Charifzadeh, M. (2016). Management and Cost Accounting. Wiley.
Wa
en, C., Reeve, J. M., & Duchac, J. (2014). Managerial Accounting. Cengage Learning.
Wild, J. J., Chiappetta, B., & Shaw, K. W. (2009). Financial and Managerial Accounting: Information for Decisions, Volume 1. McGraw-Hill Irwin.
Zimmerman, J. (2017). Accounting for Decision Making and Control. McGraw hill.