Problem
2
St.
Louis
Sports
Center
is
a
nonprofit
recreational
center
that offers three outstanding programs during the summer: sports camp, sports clinic, and sports aftercare. The president of the board of directors, Joseph Javier is concerned about the latest statement of income for the summer programs found below. He asks Controller Jamila Jaden to explain why she is allowing the sports aftercare to continue. Note the Center Director will continue on regardless of the After Care decision. The variable costs and traceable fixed costs (maintenance and Utilities) will be reduced if the cost center can be eliminated.
| Revenue | $931,000 | $267,000 | $406,000 | $258,000 |
| Variable Costs | ||||
| $315,000 | $100,000 | $110,000 | $105,000 | |
| $149,000 | $18,000 | $82,000 | $49,000 | |
| Total Variable Costs | $464,000 | $118,000 | $192,000 | $154,000 |
| Contribution Margin | $467,000 | $214,000 | $104,000 | |
| Fixed Expenses | ||||
| $115,000 | $32,981 | $50,150 | $31,869 | |
| $43,000 | $20,200 | $7,700 | $15,100 | |
| $69,900 | $8,700 | $40,600 | $20,600 | |
| $186,200 | $53,400 | $81,200 | $51,600 | |
| Total Fixed Expenses | $414,100 | $115,281 | $179,650 | $119,169 |
| Net Operating Income (Loss) | $52,900 | $33,719 | $34,350 | ($15,169) |
| * Allocated Based on Revenue |
- What is the impact on net operating profit for the whole organization and each program if the sports aftercare program is eliminated? YOU MUST UPLOAD YOUR SPREADSHEET IN GOOD FORM USING EXCEL.
- What other factors should Ms. Jaden and Mr. Javier consider?
- List at least five stakeholders that might be impacted. Be specific (for example customers, parents).
- How will these stakeholders be impacted by the decision?
- Some stakeholders are in a better position than others to respond to the impact; what might the organization due to mitigate the negative impacts on these groups?
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