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A Club runs a library for its members, As part of club policy, an annual subsidy of upto $5 per member including cost of books may be given from the general funds of the club. The management of the club has provided the following figures for its library department. Number of Club members Number of Library members Library fee per member per month Fine for late return of books Average no. of books returned late per month Average no. of days each book is returned late Number of available old books 5,000 1,000 $ 100 $1 per book per day 500 5 days 50,000 books Cost of new books $ 300 per book 1,200 books Number of books purchased per year Cost of maintenance per old book per year Staff details $10 No. Per Employee Salary per month ($) 10,000 7,000 4,000 You are required to calculate: Librarian Assistant Librarian Clerk 01 03 01 (i) the cost of maintaining the library per year excluding the cost of new books; (ii) the cost incurred per member per month on the library excluding cost of new books; and (iii) the net income from the library per year. If the club follows a policy that all new books must be purchased out of library revenue (a) What is the maximum number of books that can be purchased per year and (b) How many excess books are being purchased by the library per year? Also, comment on the subsidiary policy of the club.

A Club runs a library for its members, As part of club policy, an annual subsidy of upto $5 per member including cost of books may be given from the general funds of the club. The management of the club has provided the following figures for its library department. Number of Club members Number of Library members Library fee per member per month Fine for late return of books Average no. of books returned late per month Average no. of days each book is returned late Number of available old books 5,000 1,000 $ 100 $1 per book per day 500 5 days 50,000 books Cost of new books $ 300 per book 1,200 books Number of books purchased per year Cost of maintenance per old book per year Staff details $10 No. Per Employee Salary per month ($) 10,000 7,000 4,000 You are required to calculate: Librarian Assistant Librarian Clerk 01 03 01 (i) the cost of maintaining the library per year excluding the cost of new books; (ii) the cost incurred per member per month on the library excluding cost of new books; and (iii) the net income from the library per year. If the club follows a policy that all new books must be purchased out of library revenue (a) What is the maximum number of books that can be purchased per year and (b) How many excess books are being purchased by the library per year? Also, comment on the subsidiary policy of the club.

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter8: Budgeting For Planning And Control
Section: Chapter Questions
Problem 4CE
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A Club runs a library for its members, As part of club policy, an annual subsidy of upto $5 per member including cost of books may be given from the general funds of the club. The management of the club has provided the following figures for its library department. Number of Club members Number of Library members Library fee per member per month Fine for late return of books Average no. of books returned late per month Average no. of days each book is returned late Number of available old books 5,000 1,000 $ 100 $1 per book per day 500 5 days 50,000 books Cost of new books $ 300 per book 1,200 books Number of books purchased per year Cost of maintenance per old book per year Staff details $10 No. Per Employee Salary per month ($) 10,000 7,000 4,000 You are required to calculate: Librarian Assistant Librarian Clerk 01 03 01 (i) the cost of maintaining the library per year excluding the cost of new books; (ii) the cost incurred per member per month on the library excluding cost of new books; and (iii) the net income from the library per year. If the club follows a policy that all new books must be purchased out of library revenue (a) What is the maximum number of books that can be purchased per year and (b) How many excess books are being purchased by the library per year? Also, comment on the subsidiary policy of the club.
Transcribed Image Text:A Club runs a library for its members, As part of club policy, an annual subsidy of upto $5 per member including cost of books may be given from the general funds of the club. The management of the club has provided the following figures for its library department. Number of Club members Number of Library members Library fee per member per month Fine for late return of books Average no. of books returned late per month Average no. of days each book is returned late Number of available old books 5,000 1,000 $ 100 $1 per book per day 500 5 days 50,000 books Cost of new books $ 300 per book 1,200 books Number of books purchased per year Cost of maintenance per old book per year Staff details $10 No. Per Employee Salary per month ($) 10,000 7,000 4,000 You are required to calculate: Librarian Assistant Librarian Clerk 01 03 01 (i) the cost of maintaining the library per year excluding the cost of new books; (ii) the cost incurred per member per month on the library excluding cost of new books; and (iii) the net income from the library per year. If the club follows a policy that all new books must be purchased out of library revenue (a) What is the maximum number of books that can be purchased per year and (b) How many excess books are being purchased by the library per year? Also, comment on the subsidiary policy of the club.
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