Westmount Retirement Residence Case
Financial Management
Midterm Assessment Westmount Retirement Residence Case.
Table of Contents / List of Exhibits
Executive Summary of my Conclusions: 3 Present System: 3 Recommended System: 3 Recommendation 1: 3 Recommendation 2: 3
Main Report: 4 - Question 1 4 - Question 2 4 - Question 3 5 - Question 4 5
Exhibits 7 Exhibit 1: 7 Exhibit 2: 7 Exhibit 4: 8 Exhibit: 5 8 Exhibit: 6 9 Exhibit: 7 10 Exhibit :8 13
References /Bibliography 15
Executive Summary of my Conclusions:
Present System:
The Westmount Retirement Residence (WRR) is calculating the cost per resident by dividing the total costs by number of residents. This number is then multiplied by inflation of 5 to 8 percent to bring the estimated costs for the coming year. This is the base cost for Studio apartments, and then the cost for the one bed room and two bed rooms are calculated by adding 25 % and 50% on the base cost. So there was no system to calculate the varying service need required by different residents.
The net profit in year 2005 is 2.28%, very low net profit looking at the markets of the same industries. (See Exhibit 1)
Recommended System:
In the present system, all costs are considered as “fixed costs”. I feel, the costing can be done on activity based costing (ABC) (Eddie McLaney, Peter Atrill, 2010::400) (here in this case it is service based, need based). for Support services. Food services, Laundry service can be done by direct costing (variable costing) depends on the consumption of the resident, but this may take again a lot of expenditure to maintains individual costing and billing. Activity- based pricing (ABP) is a pricing method that combines market research data with cost accounting information to establish prices for products and services that result in designed profits .(internet resources)
Recommendation 1:
The net profit must be at least 15% as net profits in the hospitality or caretaking
Midterm Assessment Westmount Retirement Residence Case.
Table of Contents / List of Exhibits
Executive Summary of my Conclusions: 3 Present System: 3 Recommended System: 3 Recommendation 1: 3 Recommendation 2: 3
Main Report: 4 - Question 1 4 - Question 2 4 - Question 3 5 - Question 4 5
Exhibits 7 Exhibit 1: 7 Exhibit 2: 7 Exhibit 4: 8 Exhibit: 5 8 Exhibit: 6 9 Exhibit: 7 10 Exhibit :8 13
References /Bibliography 15
Executive Summary of my Conclusions:
Present System:
The Westmount Retirement Residence (WRR) is calculating the cost per resident by dividing the total costs by number of residents. This number is then multiplied by inflation of 5 to 8 percent to bring the estimated costs for the coming year. This is the base cost for Studio apartments, and then the cost for the one bed room and two bed rooms are calculated by adding 25 % and 50% on the base cost. So there was no system to calculate the varying service need required by different residents.
The net profit in year 2005 is 2.28%, very low net profit looking at the markets of the same industries. (See Exhibit 1)
Recommended System:
In the present system, all costs are considered as “fixed costs”. I feel, the costing can be done on activity based costing (ABC) (Eddie McLaney, Peter Atrill, 2010::400) (here in this case it is service based, need based). for Support services. Food services, Laundry service can be done by direct costing (variable costing) depends on the consumption of the resident, but this may take again a lot of expenditure to maintains individual costing and billing. Activity- based pricing (ABP) is a pricing method that combines market research data with cost accounting information to establish prices for products and services that result in designed profits .(internet resources)
Recommendation 1:
The net profit must be at least 15% as net profits in the hospitality or caretaking
References: /Bibliography Books Eddie McLaney, Peter Atrill, (2010), Accounting An Introduction, 5th ed. USA: Prentice Hall. Internet Resources http://www.hotelmule.com/hospitality_travel_wiki/wiki/Activity%20based%20pricing [accessed on Friday 19th Feb 2011] I affirm that the attached work is entirely my own, except where the words or ideas of other writers are specifically acknowledged according to accepted citation conventions. This assignment has not been submitted for any other course at Robert Kennedy College or any other institution. I have revised, edited and proof-read this paper. CERTIFICATION OF AUTHORSHIP I certify that I am the author of this paper and that any assistance I received in its preparation is fully acknowledged and fully disclosed in this assignment/paper/examination. I have also cited any sources (footnotes or endnotes) from which I used data, ideas, theories, or words, whether quoted directly or paraphrased. I further acknowledge that this written work has been prepared by me specifically for this course. (19 Feb 2011)