The city of Cavaliere is a medium-size city. In FY 2014, Cavaliere employed 835 full-time employees and had total expenses of $61.4 million. The Recreation Department’s sole responsibility is operating two recreation centers in the city. The Cassis Recreation Center employs nine people to operate a field house with a gymnasium and two activity rooms. The Cassis Recreation Center also includes a fitness center with equipment acquired and maintained under a lease contract costing $30,000 per year. The Lavandou Recreation Center employs seven people to operate a field house with a gymnasium and two activity rooms. The Lavandou Recreation Center does not contain a fitness center. The Department of Recreation also includes an Administration Division comprising the Director of Recreation and her office staff. The green tabs of the Excel Workbook (“Dept Rec Pers Expenses” and “Dept Rec Tot Expenses”) contain personnel details and expense details for the department. The red tab of the Excel Workbook (“Usage Survey Results”) also contains the results of a survey that was conducted at various times during FY 2012, which resulted in estimates of the visitation or usage at each of the recreation centers.
The blue tabs of the Excel Workbook (“Services Agency Info,” “Services Agency Expenses,” and “Services Provided to Rec Dept”) contain information about the internal service agencies of the city providing services to other agencies of the city. The information provided includes the tasks these agencies perform, FY 2014 employee counts, FY 2014 expenses of these agencies, performance measures of these agencies, and the services provided by these agencies to the Department of Recreation during FY 2014. You must complete the following tasks:
Estimate the full cost of operating each of the recreation centers.
Describe your plan for answering this cost analysis question, including your plan for allocating overhead costs to the recreation centers.
What are the direct and indirect costs of the recreation centers?
Define and estimate the cost pools, cost bases, and overhead rates for the indirect costs allocated to the recreation centers. Be sure to explain your reasoning for selecting one cost base over another that might be available.
What is the average cost of operating each of the recreation centers?
On January 1, 2015, Cavaliere annexed two sizeable and moderately populated unincorporated areas. It is expected that the annexed areas could result in additional users at both recreation centers. The national benchmark for daily staffing at certified recreation centers is a 30-to-1 ratio of users to recreation specialists.
Estimates suggest that user counts at the Cassis Recreation Center could increase by 65% due to the annexation and that the user counts at the Lavandou Recreation Center could increase by as much as 100% due to the annexation. Estimate the incremental cost of the additional staffing due to these increases in users.
Several city council members would like to construct an outdoor pool at the Lavandou Recreation Center. The pool would operate from June 1 to through Labor Day each summer. Develop a plan for estimating the additional cost to the Recreation Department if a pool were to be built and operated at this recreation center. What information would you need to answer this cost analysis question?
Currently, no fee is charged to utilize the fitness center at the Cassis Recreation Center. What information would you need in order to estimate an appropriate monthly fee for using the fitness center?