PART 2. Prepare a memorandum for Mr. Schaefer that includes:

1. The benefits and challenges of the Alta Vista day-care center project

2. An interpretation of the results of your CVP analysis

3. Recommendations for Mr. Schaefer about what he should consider and/or do before the board meeting

Analysis of Financial Projections - With Given Case Data Total Number of Students 25 310 20 37 2,550 1,333 700 4,583 3,400 1,867 700 5,967 4,250 2,400 700 7.350 5,383 3,200 700 9,283 60 40 40 642 782 3.801 75 50 50 835 1,010 4,957 90 60 60 1,029 1.239 6,111 111 74 74 1,300 1.559 7,724 Revenue: 2-3 year olds ($17 per day x 250/12 x 80%) 4-5 year olds ($16 per day x 250/12 x 80%) 5 year olds ($7 per day x 250/12 x 80%) Total revenue Variable costs: 8102 Educational supplies ($3 per student) 8103 Recreational supplies ($2 per student) 8105 Housekeeping supplies ($2 per student) 8201 Administrative expense (14% of total revenue) Total variable costs Contribution margin (CM) Fized costs: 7000 Salaries, total 7103 Employee benefits 7201 FICA taxes 8001 Employee fees paid 8004 Staff development training 8005 Help wanted ads 8010 Membership in other organizations 8101 Medical first aid kit supplies 8104 Food and beverage supplied by USDA 8106 Office supplies 8111 Telephone expense 8112 Postage 8401 Rent 8402 Equipment maintenance 8404 Mortgageoterloan interest 8406 Utilities, total 8501 General insurance 8502 Workmen's compensation 8601 Outside printing 8606 Subscriptions and publications 8702 Van maintenancelinsurancelgas 8706 Staff mileage 9402 Miscellaneous expenses 9500 Depreciation Total fized costs Total variable and fixed costs Operating profit (loss) Veighted average CM per student Number of students needed to break even Round up break-even students 3,126 175 239 11 33 9 4 3 0 5 140 25 0 22 0 240 92 10 25 2 45 48 10 0 4,264 5.046 (463) 190.05 22.44 22 3,928 700 300 11 33 9 4 3 0 5 140 25 0 22 0 240 92 13 25 2 45 48 10 0 5.655 6,665 (698 198.28 28.52 29 4,665 875 357 16 33 9 4 3 0 10 140 30 0 22 0 240 92 15 25 2 45 48 10 0 6.641 7.880 (530) 203.70 32.60 33 5,402 1,050 413 16 33 9 4 3 0 10 140 30 0 22 0 240 92 19 25 2 45 48 10 0 7,613 9.172 111 208.76 36.47 37 Total CM without administrative fee Veighted average CM per student vio admin. fee Breakeven number of students vio admin. fee Round up break-even students 4,443 222.15 19.19 19 5.792 231.68 24.41 35 7.140 238.00 27.90 40 9,024 243.89 31.21 31 Analysis of Financial Projections - With Given Case Data Total Number of Students 25 310 20 37 2,550 1,333 700 4,583 3,400 1,867 700 5,967 4,250 2,400 700 7.350 5,383 3,200 700 9,283 60 40 40 642 782 3.801 75 50 50 835 1,010 4,957 90 60 60 1,029 1.239 6,111 111 74 74 1,300 1.559 7,724 Revenue: 2-3 year olds ($17 per day x 250/12 x 80%) 4-5 year olds ($16 per day x 250/12 x 80%) 5 year olds ($7 per day x 250/12 x 80%) Total revenue Variable costs: 8102 Educational supplies ($3 per student) 8103 Recreational supplies ($2 per student) 8105 Housekeeping supplies ($2 per student) 8201 Administrative expense (14% of total revenue) Total variable costs Contribution margin (CM) Fized costs: 7000 Salaries, total 7103 Employee benefits 7201 FICA taxes 8001 Employee fees paid 8004 Staff development training 8005 Help wanted ads 8010 Membership in other organizations 8101 Medical first aid kit supplies 8104 Food and beverage supplied by USDA 8106 Office supplies 8111 Telephone expense 8112 Postage 8401 Rent 8402 Equipment maintenance 8404 Mortgageoterloan interest 8406 Utilities, total 8501 General insurance 8502 Workmen's compensation 8601 Outside printing 8606 Subscriptions and publications 8702 Van maintenancelinsurancelgas 8706 Staff mileage 9402 Miscellaneous expenses 9500 Depreciation Total fized costs Total variable and fixed costs Operating profit (loss) Veighted average CM per student Number of students needed to break even Round up break-even students 3,126 175 239 11 33 9 4 3 0 5 140 25 0 22 0 240 92 10 25 2 45 48 10 0 4,264 5.046 (463) 190.05 22.44 22 3,928 700 300 11 33 9 4 3 0 5 140 25 0 22 0 240 92 13 25 2 45 48 10 0 5.655 6,665 (698 198.28 28.52 29 4,665 875 357 16 33 9 4 3 0 10 140 30 0 22 0 240 92 15 25 2 45 48 10 0 6.641 7.880 (530) 203.70 32.60 33 5,402 1,050 413 16 33 9 4 3 0 10 140 30 0 22 0 240 92 19 25 2 45 48 10 0 7,613 9.172 111 208.76 36.47 37 Total CM without administrative fee Veighted average CM per student vio admin. fee Breakeven number of students vio admin. fee Round up break-even students 4,443 222.15 19.19 19 5.792 231.68 24.41 35 7.140 238.00 27.90 40 9,024 243.89 31.21 31