Category Non-Autonomous: Category Semi-Autonomous: All Residents...

	Category Non-Autonomous:		Category Semi-Autonomous:		All Residents
	Per Resident	Total	Per Resident	Total	Total
Number of Residents	100		150		250
Revenues:
Government Funding	$                32,000	$            3,200,000	$                    18,000	$            2,700,000	$            5,900,000
User fees	$                   2,500	$                 250,000	$                       2,500	$                 375,000	$                 625,000
Total Revenues	$                34,500	$            3,450,000	$                    20,500	$            3,075,000	$            6,525,000
Variable Costs:
Medical Care (60% are for salaries)	$                32,000	$            3,200,000	$                       6,000	$                 900,000	$            4,100,000
Food services (10% are for salaries)	$                   4,000	$                 400,000	$                       4,000	$                 600,000	$            1,000,000
Total Variable Costs	$                36,000	$            3,600,000	$                    10,000	$            1,500,000	$            5,100,000
Contribution Margin	-$                   1,500	-$                150,000	$                    10,500	$            1,575,000	$            1,425,000
Fixed Costs					$            1,425,000

 

EXHIBIT 2; NSC PROPOSAL - CONTRACT TERMS 

1. The initial annual government funding would be $10,800 per category non autonomous resident and 10k per semi-autonomous resident as well as an annual lump sum in the amount of the current years fixed costs plus 20% makeup.
2. NSC would be free to alter the mix and numbers of residents. 
3. NSC would be free to alter the staff to resident ratios.
4. NSC would be free to charge a fee up to 30% of the market rates directly to the residents. This would be in addition to the funding received by the government. 
5. The term of the contract would be for 10 years, during which time NSC will pay 1$ per year to lease all two buildings.

 

Exhibit 3 - CURRENT MARKET RATES FOR COMPAREABLE ELDERLY CARE SERVICES IN PROVATE RESIDENTS

 

CARE LEVEL	RATR PER RESIDENT PER MONTH
non autonomous Category non autonomous	3,000$
Semi-autonomous	1,300$

*The Ministry of Health announced a target to lower the annual funding level by 25% to Seniors Centre starting next year and advised Sandra Rogers, the executive director of Seniors Centers, to find ways to reduce funding needs, preferably by 25% in order to continue to break even8

 

Required; Perform Incremental Analysis 

Answer rating: 100% (QA)

SOLUTION Based on the information provided the incremental analysis would involve comparing the current situation with the proposed contract terms to ... View the full answer