Mi Tierra Driving School charges ($ 200) per student to prepare and administer written and driving tests.

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Mi Tierra Driving School charges \(\$ 200\) per student to prepare and administer written and driving tests. Variable costs of \(\$ 120\) per student include trainers' wages, study materials, and gasoline. Annual fixed costs of \(\$ 50,000\) include the training facility and fleet of cars. For each of the following independent situations, calculate the contribution margin per unit and the breakeven point in units:

1. Breakeven point with no change in information.

2. Decrease sale price to \(\$ 180\) per student. 

3. Decrease variable costs to \(\$ 110\) per student. 

4. Decrease fixed costs to \(\$ 40,000\).

Compare the impact of changes in the sale price, variable costs, and fixed costs on the contribution margin per unit and the breakeven point in units.

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Accounting

ISBN: 9780132439602

7th Edition

Authors: Charles T. Horngren, Walter T. Harrison

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