Benjamin Connor is the director of Acacia Business School, Ontario University. Apart from a fulltime MBA program on finance, Acacia Business School arranges short-term certificate courses of two weeks’ duration on specialized functional areas of business ranging from operations management and customer relationship management to risk management. The courses are restricted to mid-level business executives only. The performance of these courses for the current fiscal year 2020, excluding the final course on “treasury and risk management in banking” scheduled for December 7 to December 21, 2020, is as follows: 

The costs of the courses include remuneration for faculty members, rentals of the classroom and equipment, advertising, and other costs, such as travel, that can be exclusively identified with a particular course. 

The general administrative expenses include salary of the director, compensation of one secretary, and a lump-sum payment to the university for its share of overhead. 

The fee for the two-week course is $250 per candidate and 40 students have already enrolled for the course. However, a few days before the course is to begin, the manager of LBS Finance contacts Benjamin to inform that they are interested in sending 10 mid-level executives of their company for the course, provided that the course fee is reduced to $150 per person. The extra cost of including these 10 executives would entail lunches at $25 each and course materials at $35 each.

1. Prepare a tabulation of the performance for the full year, including the final course. Assume that the costs of the final course for the 40 enrollees’ instruction, travel, advertising, rental of  classroom, lunches, and course materials would be $6,000. Show a tabulation in four columns: before final course, final course with 40 registrants, effect of 10 more registrants, and grand totals. 

2. What major considerations would probably influence the pricing policies for these courses? For setting regular university tuition in private universities?

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Tuition revenue Costs of courses (variable) Contribution margin General administrative expenses (fixed) Operating income $3,000,000 1,200,000 $1,800,000 600,000 $1,200,000