Natasha is interested starting an after-school gymnastics program for kids ages 5 to 10. She estimates that her fixed costs will be $9,000 per year and her contribution margin will be $15 per hour. She desires to achieve an operating profit of $15,000. She believes by increasing her advertising, she can increase hergymnastics class hours to 2,000 hours annually.

a. How much can she spend on sales-promotion costs so that she can increase her class hours to 2,000 hours?

b. What are some examples of variable costs for Natasha's gymnastics class business?

c. What types of costs would you have included in the fixed costs categories for Natasha's gymnastics class business?

d. What other internal and external information is relevant in deciding whether to pursue the gymnastics class business?