Triad Children's Center (TCC), a non-profit organization, uses relevant cost analysis to determine whether new services are desirable. TCC is looking at adding a new educational program for grade school children who are having difficulty with their reading and math skills. The following relevant costs are expected if the program is accepted:
| Costs (per year) | |||||||||||||||||||
| Program Director salary | $ | 34,000 | |||||||||||||||||
| Part-time Assistants | $ | 29,000 | |||||||||||||||||
| Variable cost per child | $ | 1,200 | |||||||||||||||||
TCC estimates that a maximum of 40 children will participate in this program in the first year. If TCC decides to implement this program, funding will be received from the City Chamber of Commerce ($56,000) and a local Private University Endowment Fund ($33,000).
Calculate the expected surplus or deficit from operations given the above information.
Multiple Choice
$32,000 surplus.
$14,000 surplus.
$21,000 deficit.
$22,000 deficit.
Some amount other than those listed here.
Total cost = $34,000 + $29,000 + ($1,200 X 40) = $111,000
Total funds = $56,000 + $33,000 = $89,000
Total cost is more than total funds.
Deficit = $111,000 - $89,000 = $22,000
4th option.
Triad Children's Center (TCC), a non-profit organization, uses relevant cost analysis to determine whether new services...