Kenton and Denton Universities offer executive training courses to corporate clients. Kenton pays its instructors $5,000 per course taught. Denton pays its instructors $250 per student enrolled in the class.

Both universities charge executives a $450 tuition fee per course attended.

Required

a. Prepare income statements for Kenton and Denton, assuming that 20 students attend a course.

b. Kenton University embarks on a strategy to entice students from Denton by lowering its tuition to $240 per course. Prepare an income statement for Kenton, assuming that the university is successful and enrolls 40 students in its course.

c. Denton University embarks on a strategy to entice students from Kenton University by lowering its tuition to $240 per course. Prepare an income statement for Denton, assuming that the university is successful and enrolls 40 students in its course.

d. Explain why the strategy described in Requirement b produced a profit but the same strategy described in Requirement c produced a loss.

e. Prepare income statements for Kenton and Denton Universities, assuming that 10 students attend a course, and assuming that both universities charge executives a $450 tuition fee per course attended.

f. It is always better to have fixed rather than variable cost. Explain why this statement is false.

g. It is always better to have variable rather than fixed cost. Explain why this statement is false