Opening a daycare center
Starting a daycare center demands investment and should be lucrative. Mary Doe plans to build a daycare business with a $75,000 annual profit. An income statement shows document that describes earnings and expenses. This report examines the financial statements to assess the daycare’s viability. This task was to evaluate her income statement and decide whether she should establish the business (Das eta al.,2018).
Mary believes she will have seven children a day and 250 days per year. She will pay the instructor $26,000 a year, so each child will receive $75 in supplies. As student numbers grow, so does the number of teachers. For example, with 19 or more pupils, we require four teachers, but only two torchers with 7-12 children. Increase in number of teachers also increases the yearly teaching cost.
The number of kids each day and the fee per child have an impact on the overall annual revenue. Mary plans to charge each child $50 per day; if she has seven children each day for a total of 250 days, then will make $87,500. We expect revenue to rise when the number of kids each day rises, and vice versa. We expect revenue to rise if the per-student tuition fee increases, and vice versa.
Mary expects each child to spend $1.3 each day on food, thus she can spend $2,188 per year on food. So, with seven kids, each youngster will spend $75 on supplies per year. Seven pupils require two teachers at $26,000 each, for a total of $52,000. $5,000 for insurance, $6,500 for maintenance and administration, and $12,000 for taxes. End-of-year fixed expenses will total $24,500. Fixed and variable expenses is $79,213 and Mary expects is expected to earn $87000 annually. Mary assumes 7 children every day and 1750 per year. Net revenue of $8,288 is expected based on Mary’s projected child count. Children and daily tuition fees can have a big impact on net income (Groen-van de Ven et al.,2017).
Mary should boost her daily daycare enrollment expectations. Increasing the number of children each day boosts net income. With six children, the earnings are $22,175, and with 15 children a day, their profits are $79,188. However, having children raises total expenses. For example, 6 pupils per day cost $52,825, while fifteen children per day cost $108,313. Since she expects a $75,000 profit, she should anticipate Fifteen children. Mary should charge more than $50 each child. She may charge $55 for 12 children, $60 for 11 children, $65 for ten children, or $70 for nine children. The expected child population is inversely related to a tuition fee. Increasing the per-child tuition fee increases the net profit.
In conclusion, based on the case description and the information, Mary is not viable to establish the business. Assume 8 students per day, spend $26,000 each teacher, spend $60 per child year on supplies, and charge $50 each child daily. If we raise the fee per child, we may see fewer children enrolling in childcare per day. Using the economic scenario, we predict net income between $56,688 and $20,520. A profit of $85,025 per year is the only possible choice. Mary’s high rates make achieving an annual net profit of $85,025 difficult. In Ontario, the maximum charge for each student is $96.20 applicable to infants (Hasson et al.,2021).
Das, R., Das, R. K., Sahoo, S., & Nanda, S. (2018). Role of dexmedetomidine as an anaesthetic adjuvant in breast cancer surgery as a day-care procedure: A randomised controlled study. Indian journal of anaesthesia, 62(3), 182.
Groen-van de Ven, L., Smits, C., de Graaff, F., Span, M., Eefsting, J., Jukema, J., & Vernooij-Dassen, M. (2017). Involvement of people with dementia in making decisions about their lives: a qualitative study that appraises shared decision-making concerning daycare. BMJ open, 7(11), e018337.
Hasson, F., Jordan, J., McKibben, L., Graham-Wisener, L., Finucane, A., Armour, K., … & Kernohan, W. G. (2021). Challenges for palliative care day services: a focus group study. BMC palliative care, 20(1), 1-9.