"It's Close to a $40,000 Loser and We Ought to Devote

question 58

Essay

"It's close to a $40,000 loser and we ought to devote our efforts elsewhere," noted Cindy Mires, after reviewing financial reports of her company's attempt to offer a reduced-price daycare service to employees. The daycare's financial figures for the year just ended follow.

If the daycare service/center is closed, 70% of the traceable fixed cost will be avoided. In addition, the company will incur one-time closure costs of $6,800.
Required:
A. Show calculations that support Mires' belief that the daycare center lost almost $40,000.
B. Should the center be closed? Show calculations to support your answer.
C. What problem might the company experience if the center is closed?

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Definitions:

Effective Recall

The ability to accurately retrieve and remember information when needed.

Grocery Items

Items available for purchase in a grocery store, including food, beverages, household goods, and personal care items.

Iconic Memory

A type of visual sensory memory that holds an exact copy of the seen image for a very short period of time.

Mental Image

A representation of sensory experience generated by the mind, not presently being perceived.