American School is an international private elementary school. In addition to regular classes, after-school care is provided between 3:00 pm and 6:00 pm at

CHF

10

per child per hour. Financial results for the after-school care for a representative month month are as follows:

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(Click

the icon to view the financial results.)Revenue, 750 hours at CHF 10 per hour

CHF

7,500

Less

Teacher salaries

CHF

5,300

Supplies

1,400

Depreciation

2,000

Sanitary engineering

350

Other fixed costs

100

9,150

Operating income (loss)

CHF

(1,650)

The director of

Lucerne

American School is considering discontinuing the after-school care services because it is not fair to the other students to subsidize the after-school care program. He thinks that eliminating the program will free up CHF

1,650

a month to support regular classes.

Read the

requirements

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.

Requirement 1. Compute the financial impact on

Lucerne

American School from discontinuing the after-school care program.

Begin by classifying each cost as either avoidable or unavoidable. (Leave unused cells blank.)

Avoidable	Unavoidable

Now determine the increase or decrease in operating income should the school discontinue the after-school care program. (Use a minus sign or parentheses for a decrease in operating income.)

Decrease in costs	CHF
Less: Decrease in revenues
Increase (decrease) in operating income	CHF

Requirement 2. List three qualitative factors that would influence your decision.

Qualitative factors to consider
1.
2.
3.