60.1K

Verified Solution

Link Copied!

Case Story Ali and Mona are friends. They both worked for a construction company for 35 years. Ali and Mona retired and decided to start a child care business in Ali' house called Tamara's House. Tamara's House is permitted by the government. The government charges per year tax of $225 to maintain the permission. Business Insurance is required at a cost of $3,840 per yea. The House is permitted to care for a maximum of six children. The Tamara' house charges a tuition fee of $800 per month for each child. The monthly tuition fee is for a full day of care, from 8:00 a.m. to 4:00 p.m. If additional time is required beyond 4:00p.m., parents must pay an additional charge of $15 per hour for each child The Tamara' house provides two meals and a snack for the children. The cost of the meals and snack is $3.20 per child per day. There are six children currently enrolled. Tamara' house is equipped with a small kitchen, two bathrooms and a small laundry area. During the first week of operations, the washer and dryer stopped working. Both appliances were old and had been used for many years. The old appliances cost a total of $440. While a laundry room was not initially a necessity, it became increasingly important for laundering the soiled clothes of the children, blankets, and sheets. A company nearby, Green Oak Laundry and Dry Cleaning, can launder clothing for them, including pick-up and delivery, for $1 per piece per month ( The total number of pieces is 52 pieces). Alternatively, they can take clothes to the laundromat once a week, which is three miles away (one-way). The applicable mileage rate is $0.56/mile. They can launder the clothes themselves at a cost of S.154 per piece per week the total number of pieces is 52 pieces). The self-service alternative does not include detergent or fabric powder. They would need to purchase these items in order to use the laundromat. Purchasing laundry supplies in bulk from supermarket would cost $35 every quarter. The final alternative is for them to purchase a washer and dryer. The cost of the appliances is $878.72 ( The appliances will be depreciated using straight-line method ). Both appliances are expected to live 8 years. According to the manufacturer, the washer will increase energy costs by $120 per year. The dryer will increase energy costs by $145 per year. Task 2: What is the best alternative for laundry needs? Discuss the incremental costs of each of the following alternatives to recommend Tamara' House with the best alternative to cover it's laundry needs. Show your work in details Alternative 1: Purchasing new appliances : Incremental Analysis Alternative 2: Self-serve laundry ( laundromat) Incremental Analysis Alternative 3: Delivery laundry service ( Green Oak Laundry and Dry Cleaning) Incremental Analysis Recommendation

Answer & Explanation Solved by verified expert

See Answer