Conference Booking Room

Quest Coaching System (QCS) offers coaching seminars for personal development in topics such as networking, building relationships, work/personal time balance, and goal setting. A relatively new seminar, offered previously in Edmonton, is called "Creative Goal Setting for Accountants." QCS is considering running this seminar in Calgary for the first time in Hotel Suburb, three hours per evening on four consecutive Tuesdays (12 hours total).

The seminar would be priced at $550 per person. (A book must be purchased but can be obtained independent of QCS through booksellers.) Variable costs per person attending the seminar are catering, $60; supplies, $36; written feedback on seminar assignments, $24, and royalty paid to the firm that designed the seminar, $100. Fixed seminar costs are: instructor compensation, $3000; advertising, $1,500; and administrative expense, $250.

QCS can rent a small conference room in Hotel Suburb with a capacity of 20 students at a cost of $800 for all four evenings. There is also a large conference room available in the same hotel with a capacity of 50 students, costing $1,500 in total. QCS must commit to its choice of conference rooms three months in advance of the first seminar date, but registrations are accepted until the first date. The seminar ran twice in Edmonton; 18 people registered the first time and 23 the second.

REQUIRED

Ignore income taxes.

1. Calculate where, in terms of the number of people who register, the first Calgary run of the Creative Goal Setting for Administrative seminar will break even. If necessary round up answers to the next integer (person).
2. Suppose that QCS uses the small conference room in Hotel Suburb and that 18 people (equal to the first run in Edmonton) will register. What price per person must QCS charge in order to meet a profit goal for the seminar of $3,000?
3. Suppose that another conference room (capacity 40 students) is available in Central Hotel at a cost of $3,000. Central Hotel is a better hotel in a better location than Hotel Suburb, in downtown Calgary, and consequently, QCS would price the seminar at $650 per person if it were held there. Central Hotel would provide catering at a cost of $50 per person; all other cost behavior would be unchanged. At what registration (number of people attending) would profit or loss be the same whether using the Central Hotel conference room or the large room in Hotel Suburb? Ignore your answer to part 2; the tuition charged if Hotel Suburb is used is $550 per person.
4. Should QCS use Hotel Suburb (small room), Hotel Suburb (large room), or Central Hotel? Discuss risk, profit opportunity, and your answers to parts 1 and 3. Show any additional supporting calculations. Assume that tuition charged if Hotel Suburb is used is $ 550 per person.
5. QCS anticipates a volatile business environment in the future. How would you use the probabilistic modeling concepts taught in class to further deal with business uncertainty in a real-world setting? You can make assumptions as required.