Cost-volume-profit analysis

A social welfare agency has a budget from the provincial government for 2014 of $900,000. The agencys major mission is to help disabled persons who are unable to hold jobs. On the average, the agency supplements each persons income by $5,000 annually. The agencys fixed costs are $280,000. There are no other costs. You are the Manager of the agency. The cost analyst tells you that 124 disabled persons were helped during 2014.

1. How did the cost analyst arrive at the figure of 124 persons?
2. For 2015, the agencys budget has been reduced by 15%. If the agency continues the same level of monetary support per person, how many disabled persons will be helped in 2015? What is the percentage decline in the number of persons helped?
3. You discuss the results arrived in Requirement 2 with the executive director who is adamant that the number of persons helped not be impacted despite the reduction in the agency budget of 15%. You have discretion as to how much to supplement each disabled persons income. On the average, what is the amount that can be given to each person? What is the percentage decline in the annual supplement?