Westmount Retirement Residence Cos System Analysis

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1 WESTMOUNT RETIREMENT RESIDENCE: New Costing System and Pricing recommendation Financial Management MBA in Sustainability and Leadership Robert Kennedy College 2 TABLE OF CONTENTS / LIST OF EXHIBITS Executive Summary_____________________________________________________ _______3 Main Report______________________________________________________ ____________5 Exhibit A___________________________________________________________ __________8 Exhibit B___________________________________________________________ __________9 Exhibit C___________________________________________________________ __________9 Exhibit D___________________________________________________________ _________10 Exhibit…show more content…
5 Conclusions: 1. With the new costing system in place, that allows the company identifying the activities that generate the most relevant costs, it will be possible to use a pricing system that takes into account the changes in demands of the clients. 2. A new pricing model was suggested for 2006 based on the new costing system. If this pricing model was used in 2005 the net income would have been 7% higher. 3. The new system allows charging additional services required by the clients, generating more revenue. 4. Knowing which are the cost drivers , it will be possible to control costs more effectively (reducing fixed costs and increasing net margin) 5. Market analysis with direct competitor in the region suggests that studio prices are at least 21% lower and one bedroom suite prices are at least 40% lower than the competition in the new pricing model. Comparison with the general market suggests similar findings. MAIN REPORT In May 2006, Westmount Retirement Residence was having very low

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