When the city council learned how expensive the daycare was
going to be, they wanted to look at cost saving options. Particularly, they wanted to know how much
eliminating infant care would be because Councilman Bob Knight owned a daycare
and suggested that toddlers were much less expensive than infants. The city council wants to know what the full
cost per child will be with administrative expenses allocated to two cost
centers: infants and toddlers. They also
want a recommendation about whether this would be a good cost saving option for
Allocate indirect costs to the infants and toddlers. 1/3 of the students are infants and 2/3 are
toddlers. The state allows for a 4:1
ratio of infants to teachers and an 8:1 ratio for toddlers to teachers. Because of the budget pressure, council wants
to max this ratio. Infants will
generally take about half of the space of toddlers and you should assume that
the daycare will use all of the space for childcare. Capital equipment is allocated based upon the
Assignment: Use last week’s budget and split out the total
cost between the infants and toddlers.
How much does it cost per child?
What is your recommendation about eliminating infant care?