Madison is trying to determine whether the segments they are considering for their day care centre will be profitable. Which of the following will not specifically help Madison with this analysis?

Question

Madison is trying to determine whether the segments they are considering for their day care centre will be profitable.  Which of the following will not specifically help Madison with this analysis?

BlackTom AI · Accepted Answer

Framing the scenario: Madison wants to assess profitability for potential day care segments, and we must evaluate which option is not specifically useful for that analysis.
Option 1: 'The number of children needing day care in the immediate area.' This directly informs demand size, which is essential for projecting revenues and capacity needs, so it is relevant.
Option 2: 'The fixed costs of operating the centre.' Fixed costs matter for break-even calculations and overall profitability, making this information clearly useful.
Option 3: 'The price they would charge minus the variable cost of providing service to each child.' This is basically contributing margin per child, a core element of profitability, so it is highly relevant.
Option 4: 'The average number of school-age children in families sending a child to the day care centre.' Here, the focus is on school-age children, not necessarily the number of preschool or daycare-aged children who would actually use the service; this metric does not directly inform day-care profitability for typical users and could mislead demand sizing, making it the least directly tied to profitability analysis.
Option 5: 'The percentage of parents in the area who can both afford to send their child or children to day care and who are willing to do so.' This reflects market affordability and willingness to pay, which are critical to estimating feasible demand and pricing strategy.
In summary, most options provide actionable inputs for estimating demand, costs, and margins that drive profitability. However, Option 4 focuses on school-age children rather than the target daycare user cohort, giving less direct insight into the center’s profitability and thus does not specifically advance the profitability analysis as clearly as the other factors.

COMM_V 296 103 104 2025W1 2025W1 COMM 296 Mid-Term Exam - October 16 - Requires Respondus LockDown Browser

Madison is trying to determine whether the segments they are considering for their day care centre will be profitable. Which of the following will not specifically help Madison with this analysis?

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