1) What assumptions are implicit in Mr. Thomas's determination of a break even point? - Fixed Costs are truly fixed

2) Using the data in Exhibit 1, calculate a breakeven for each of the three programs. Infants & Toddlers Pre-School After-School Aggregate/Average Unit Selling Price $4,520 $5,320 $5,970 $5,113 Unit Variable Cost Unit Contribution Margin Fixed Costs: Program Allocated Breakeven Students: Program 75 Allocated 39 Total 114

3) On the basis of the suggestions and comments made at the meeeting, and making assumptions where necessary, prepare revisions to Exhibit 1. What is the new breakeven volume for the Center? What is it for each of the three programs

Additional fixed costs (actually step-function): Preschool Program After School Program $25,000 Total Previous fixed cost (program plus allocated) New fixed cost level $545,700 Additional Variable Costs: Supplies Food Total Infants and Toddlers Program $498 Preschool Program After School Program New tuition with across the board increase: Tuition Infants and Toddlers Program Preschool Program After School Program Change in Client Mix: Students Infants and Toddlers Program Preschool Program After School Program New Program Analysis with Updated Assumptions: Infants & Toddlers Pre-School After-School Aggregate/Average Students at full capacity 150 Actual number of students Fee per student total revenue Variable cost per student Total variable costs Contribution Margin to program fixed costs $687,846 Less: Program fixed costs Contribution to allocated fixed costs Less: Allocated Fixed costs Surplus (deficit) $142,146 New Break-even Analysis Infants & Toddlers Pre-School After-School Aggregate/Average Unit Selling Price $5,742 Unit Variable Cost $829 Unit Contribution Margin Fixed Costs: Program $375,000 Allocated $170,700 Breakeven Students: Program Allocated Total 111 4) Based on the information in Exhibit 1, Ms. Fineberg is considering eliminating the After School Program. What advice would you give her?

PUT IN EXCEL SHEET FORM PLEASE !

Case #2 - Abbington Youth Center Template.xlsx