A case study on Westmount Retirement Home

A case psychoanalyse on Westmount retirement HomeNew breeding can be considered valuable in terms of decision making. From tonic discipline, the derivation of new and frequently relevant st sitegies can be utilized. In this paper, an analysis on how does new information becomes a valuable asset to transform Westmount solitude kinfolk struggles with its accepted accounting carcass of rules which affects its profitableness to a more effective Activity- base exist system that can improve overall art operations. This paper exposeline both the strengths and terminus ad quem of the current exist system by Westmount and at the same time take into accountd new elements that support the proposed Activity-based embodying system and its benefits.The choose as well showed calculated suggested new impairment posts on the mode pickaxs for Westmounts current and potential residents together with its proposed new fees for additional processs and health check involve.In troductionA 125 Unit retirement residence was accomplished on the year 1997. It was called Westmount Retirement home. The core purpose of this retiring home is to cater to seniors of the community. Westmount Retirement home suffers both assisted living and free-living supportive living excerptions to their clients. Their current clients argon divided into two segments, matchless is the independent supportive residents which overlook no assistance with the tasks of daily living, the sepa set ar assisted living residents which basically requires additional assistance which varies depending with their checkup demand and degree of frailties.T here are thirty-one (31) employees on Westmount that is spread crosswise all of the retirements home some(prenominal) departments. There is basically several mental faculty employed on a department that specializes on recreational activities, housekeeping, management, building maintenance and nursing.With regard to prices offered to We stmounts residents, the determine cast is actually simple and coherent for all residents and the except variance or difference is fundamentally based on the size of it of each way. In this study, the author lead crumple the case by providing a intelligence on Westmounts poor monetary results in 2005 this forget be fol starting timeed by analyzing the companys current hailing object lesson by highlighting its strengths and limitations. Next leaveing be a computation of the new cost per patient employ the data of the current pricing model to create a new costing system. And finally, a discussion on how valuable new information can assist Westmount into creating a more suitable pricing scheme on its residents.Statement of the paradoxWestmount Retirement Home has been struggling due to low profitability of its business operations as well as its current accounting system (Shomair 2008). From the low profitability standpoint, Westmount has faced stiff competition, among some otherwise local notice players on their effort. Westmount has currently three main competitors namely Chelsea Park retirement, profound park lodge and Longworth Retirement residence. Heavy competition arose due to the change magnitude demand for assisted and supportive living options. Thus, due to the availability of several retirement homes, key industry trends shows that a visual modality of potential residents are basing their decisions on residence options on the gene of cost.Regarding Westmounts current pricing model and accounting system, the company offers a standard rate (price) on legion(predicate) operate to various patients and at the same time attending to individuals special claims. The outlet here is that there is no system or a defined activity-based costing (Platt and Vaysman 2000) in place to account for those varying service needs required by different residents. The obvious result here is a low profitability which can be attri thoed to its high o perate expense.Westmounts Current pricing model Strengths and LimitationsStrengthsBased on industry trends, a lot of potential residents are focusing on the cost factor on deciding which retirement home they will get into. Westmount Retirement Homes offers a very attractive and competitive pricing package by having a basic and standard pricing scheme in which the only difference in prices are from elbow room sizes and not other pity services. This has attracted a number of residents to Westmount.Not only does Westmount put up a render price rate across all their services, it alike has the most low-cost prices compared to its competitors.Westmounts Package or Deal Pricing or most ordinarily known as a Bundled Payment (Miller 2008) provides its target market a hassle free approach on understanding the total cost of organism a resident.LimitationsThe current costing system of Westmount does not provide any valuable information more particularly on the cost of each their services, since the only method of differentiation with their cost are on room sizes.Potential variability in cost especially on specific services in relation to clients needs is disregarded, due to the limitation of the current costing model.Substantial revenue can be garbled as well with this model. As an interpreter, , resident couples can stay at their rooms with no additional cost and have the same negociate and services as long as they pay for the room rate only.The current costing system does not provide any alley or room for improvement specifically on in operation(p) expenses. For caseful a lot of module hours are still being compensable even without services rendered.New be Model DesignActivity-Based CostingThis new cost model will in spades improve not only the current accounting system of Westmount but its overall profitability as well. The benefits of an Activity-based costing is that instead of be assigned to fixed costs, are now can be utilized as variable costs depe nding numerous activity cost pools in Westmount (Weygandt, Kimmel, Kieso 2009).In essence, it controls the companys overhead costs and leads to a more effective decision making by the management on how to improve overall finances.Room RatesA new rate will be reflected on this new costing model. To acquire a more suitable and competitive rate for Westmount, New room rate will be the computed by getting the average cost per room of all the three main competitors (see Exhibit 1). The average cost per room will provide an essential perspective on how much does the competitors hinge on per room (studio, one bedroom and two bedroom models) in this fictional character of industry. Also, it can be used as the new room rate for Westmount. The purpose of which is for the discerning buyer would not only look at the room prices but also other features such as flavor of services, facilities etc. This is possible since the difference between the New Westmount prices compared to its competitors are relatively insignificant, in fact the new rate on average is cheaper than the other two competitors (Central and Longworth). Except for Chelsea Park in which Westmount can compete via other methods for e.g. Marketing high quality services and facilities.Price differences because of room size will still be applicable with the new rates. Regarding the current issue with having couples share the room and services, Westmount can utilize their two bedroom units. lone(prenominal) one competitor has this residential type (Chelsea Park). Westmount can have the option of selling those units to couples with the new room rate without an additional charge. This will provide Westmount the ability to attract more potential residents and have those clients focus on getting a two bedroom if they want to consider being with their spouses.With these new rates alone, Westmount can generate more revenue out of its projected client base of 160 residents and in effect will increase profitability.I dentifying and Matching Residents needfullyEach resident may have different or special needs, contrary to the previous system in which these differences are barely nonexistent. This can be done by Westmount using proper segmentation of all its current residents, more particularly to those residents require additional services or different levels of care. This can be metameric by using a three modelled option for service fees. archetypical are the residents with no medical examination needs, because with moderate medical needs and lastly those with intense medical needs, for the last two chemical groups, they could have the option to purchase nursing and medical support at an additional cost. This also follows the activity-based costing model proposed for this company.New Prices for Additional Services and Medical NeedsFor those living residents with no medical needs rates, the new room costs will be the base price to be utilise. On the other hand, those on the other group whic h require added services and medical needs would pay additional costs for each service and medical need (see Exhibit 2 for Activity-Based costing) The price of each service will be determinant to its operating cost summation 15% mark-up, to ensure tolerable return to Westmounts shareholders and enough funds for necessary capital requirements.Utilization of grok AvailabilityAs in any organization, some employees are more productive than others (Platt, and Vaysman 200019). With this new model the author allocated cost of each staff members compensation-related costs among the several activities in which he or she is responsible. Since a lot of man-hours are consistently wasted with the current costing system, the new system approach would be almost the exact opposite.Each resident group will now have staff available to them only when they real need them. Examples of these are dieticians employed for those patients with serious medical conditions their hours now will be spent entir ely to this resident group, in effect fall their total work time. And since they will now be paid on an periodic basis it will drive down costs on this support service. These hourly basis of work schedules will be applied across the board to ensure that all time spent will be productive and useful. This is also a win-win suggestion especially the special time given to these staff members will create a much more balance in their work-life relationship. As for Westmount, obviously this will foster drive down operating costs, by eliminating its current fixed costs of labour and transforming it into a variable costs which can either be seasonal depending on the demand for staff availability.Value of New informationIn any facet of economics most particularly in enterprise, new information that can be used to apply new strategy and other development are all considered essential and valuable. Cohen and Leviathan utter that The ability to exploit external knowledge is thus a exact com ponent of innovative capabilities (1990122). In this case, Westmounts administrator Helen Roswell, have noticed the low profitability of the firm and analyze what could be the causes. She acknowledges external factors could contribute to it, but her main concern was on their pricing model and total operating expenditure. This realization made Roswell think of other alternatives apart from the current cost model, especially when this current model has a direct impact on the firms overall profitability. To continue to attract more clients and still remain profitable, a new pricing model was needed to reflect the level of medical care and service required by each individual patient. Roswell has also decided that she would need to assess the true cost of each Westmounts services, and then use this information to develop a new pricing model.The price schemed for room rates specifically as aforementioned in this study will be the monthly average price of all industry players. The added or special service or medical need will be on a case to case basis in which the price will be service operational cost plus 15% mark up. This new pricing scheme can definitely alleviate Westmounts overall profitability and decrease operational expenses.CalculationsAs an example for Supportive ServicesNumber of Employees17 organic Cost amounted to $548, 573.Total wages is at $538, 392Total Supplies used cost $10,181Two (2) dieticians is even out $18.50/hour each. 37 hours/week 48 weeks Total costs for Dieticians return per year $65, 712Estimated. Number of residents with intense medical need for dieticians 50.The total cost of the two dieticians wages for this scenario will now be allocated on an hourly basis or 25% allocation example, in which the demand for their services ( in this case the 50 residents) will be applied.