The company management recently had a meeting to discuss investment in different industry or sector. David Smith, a management staff drew their attention to prospect of investment in schools (private education). However, Smith’s concern was in relation to his limited knowledge about the activities that may contribute to costs and how these can be controlled or reduced. Other members of management raised other investment options, but they settled on the option of looking into establishing preschool. There were also other concerns raised during the meeting, but management reached a consensus on the need to commence looking into establishing a preschool by initially analysing the activities of a preschool and use ABC system to assign cost to the activities. With the company’s current trading connections with schools, it was able to acquire the following list of potential activities for a preschool

Free play activities - While children play either inside or outside, a few teachers monitor their progress whiles others prepare learning activities to be used later.

• Art and craft activities - These daily activities promote some of the same skills as the learning activities, but children are encouraged to be more creative. 

• Miscellaneous - These activities include greeting the children, helping them with their coats, helping them used the rest room, interacting with parents, and conferencing with parents. 

• Music activity - This weekly activity encourages the children’s interest in music and dance. 

• Conferencing with parents - This quarterly activity consists of the headteacher (your sister) meeting with each child’s parents for half an hour. 

• Learning activities - At times during the day children are listening to stories, learning to sing simple songs, following simple directions as a part of games or art activities, and playing interactively with special toys developed to enhance eye-hand coordination or understanding of spatial relations. 

• Resting - The children rest on mats during this activity while one teacher monitors and the other teachers prepare lesson plans. 

• Snack and meal activities - Snacks and meals are prepared by teachers and one food service employee. Sometimes the students prepare their own snacks and practice following directions

Required: 

(i) With reference to the potential activities for a preschool as highlighted in the case study and your knowledge of cost hierarchies or ABC hierarchy of activities, select five of these activities to be used as cost pools and discuss you selection.
(ii) With reference to the potential activities for a preschool as highlighted in the case study, select cost drivers for these cost pools and give reasons for your selection. You should seek to support your discussion, evaluation and reasons with relevant academic literature, and where appropriate, real-life cases or examples. 

Answer rating: 100% (QA)

my answer is as shown below efore classfiying the activities into different cost pools first lets un... View the full answer