Gibson Academy is a profit-oriented education business. Gibson provides remedial training for high school students who have fallen behind in their classroom studies. It charges its students $1,275 per course. During the previous year, Gibson provided instruction for 1,000 students. The income statement for the company follows: Revenue Cost of instructors Overhead costs Net incone $1,275,000 (850,000) (270,000) $ 155,000 The company president, Andria Rossi, indicated in a discussion with the accountant, Sam Trent, that she was extremely pleased with the growth in the area of computer-assisted instruction. She observed that this department served 200 students using only two part- time instructors. In contrast, the classroom-based instructional department required 32 instructors to teach 800 students. Ms. Rossi noted that the per-student cost of instruction was dramatically lower for the computer-assisted department. She based her conclusion on the following information: Gibson pays its part-time instructors an average of $25,000 per year. The total cost of instruction and the cost per student are computed as follows: Type of Instruction Computer-Assisted Classroom Number of instructors (a) Number of students (b) 2 200 Total cost (c-a $25,000) Cost per atudent (c b) $50,000 250 32 800 $800,000 $ 1,000 Assuming that overhead costs were distributed equally across the student population, Ms. Rossi concluded that the cost of instructors was the critical variable in the company's capacity to generate profits. Based on her analysis, her strategic plan called for heavily of enmuts se instruction < Prev 10 of 10 Next >