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