CVP, target income, service firm. Teddy Bear Daycare provides daycare for children Mondays through Fridays. Its monthly variable costs per child are Lunch and snacks $120 Educational supplies 90 Other supplies (paper products, toiletries, etc.) 30 Total $240 Monthly fixed costs consist of Rent $2,400 Utilities 360 Insurance 360 Salaries 3,000 Miscellaneous 600

$6,720 Teddy Bear charges each parent $720 per child 1. Calculate the breakeven point.

2. Teddy Bear’s target operating income is $12,480 per month. Compute the number of chil¬

dren that must be enrolled to achieve the target operating income.

3. Teddy Bear lost its lease and had to move to another building. Monthly rent for the new building is $3,600. At the suggestion of parents, Teddy Bear plans to take children on field trips. Monthly costs of the field trips are $1,200. By how much should Teddy Bear increase fees per child to meet the target operating income of $12,480 per month, assuming the same number of children as in requirement 2?