Marie Stefano is the group director of customer training for Mayfield Software. In this capacity, she runs

Question:

Marie Stefano is the group director of customer training for Mayfield Software. In this capacity, she runs a center in Kirkland, Washington, that provides training to employees of companies that use Mayfield's inventory control, customer management, and accounting software products. Her group employs a receptionist and an office manager/bookkeeper, and she has arrangements with several part-time trainers who are hired on an as-needed basis. (They are all retired employees of Mayfield Software.) Trainers are paid $4,000 per daylong class. Mayfield is a decentralized company, and Marie is given considerable authority to advertise and conduct classes as she sees fit.

Report of Operating Results, 2016 $6,120,000 Revenue Less operating costs: Trainer costs $3,400,000 Director salary Rece

During 2016, the group conducted 850 day-long classes with an average enrollment of 20 students paying $360. The group's Report of Operating Results for 2016 is detailed above.
Additional Facts
1. All equipment is leased on a yearly basis. Costs include 100 workstations for students (one workstation for every seat in each of the four 25-student classrooms), plus servers and other miscellaneous equipment. While average class enrollment is 20 students, some classes are full (25 students), and classes are cancelled if enrollment is fewer than 15 students. Classes typically are held Monday through Friday, although some classes are held on Saturdays and Sundays.
2. Rent relates to the training center in Kirkland, which is not part of Mayfield's main campus located in Bellevue, Washington.
3. Advertising costs relate to the cost of monthly advertisements in trade journals such as TechWorker and Inventory Management. These ads provide information on upcoming training sessions.
4. Operating manuals are provided to each participant.
5. Postage, envelopes, and paper costs relate primarily to billing companies for employees who participate in classes. This cost varies with the number of participants.
6. Central charges are assigned to each group at Mayfield Software based on actual sales. The allocation relates to costs incurred for the benefit of the company as a whole, including salaries of the CEO and company president, legal costs, costs related to the company's central office building, brand advertising, and so on. The charge is 20 percent of revenue.
Required
a. As indicated, the training group suffered a loss in 2016. Thus, unbeknownst to Marie, Mayfield management is considering shutting down the training center. Given the results of 2016, what would be the effect on Mayfield Software's total company profit in 2017 if the training center is closed at the start of the year?
b. Given the current room configuration and approach to allocation of central charges (20 percent of revenue), calculate the number of classes that must be offered (with an average enrollment of 20 students) for Marie's group to break even on the Report of Operating Results.
c. Recalculate your answer to part b assuming Marie can lower the amount paid to instructors to $3,500 per class. Should Marie seriously pursue this option?
d. Mayfield Software is releasing version 4.0 of CustomerTrack in 2017. Marie believes that this will create a demand for 30 additional daylong classes with an average enrollment of 20 students per class. What effect will this have on "group profit" on Marie's Report of Operating Results? Assume that instructors will be paid $4,000 per class.