Question
ichmond baking School teaches students how to become a good cake designers. The following relates to the income and costs analysis for the school for
ichmond baking School teaches students how to become a good cake designers. The following relates to the income and costs analysis for the school for 2017
Fees charged :
Senior cake design Class - $75 per class per student
Costs
Resources - $200 per senior students.
Teacher - $35,000 per annum (there are 2 teachers in the school )
Class Consumables (such as whiteboard markers, worksheets) - $30 per student
Administrative Expenses - $40,000 per annum
Finance Costs - $8,000 per annum
There are 40 lessons in a school year for both senior and junior levels.
Suppose there are 50 senior students enrolled. Each class is made up of 8 students and school fees are not refundable.
Extra Information
how many junior students are enrolled? 50
how much is collected from them? You have to calculate it from the fees charge information
The school plan for 2017 is to accept both senior and junior students next year.
1- Prepare a CVP income statement using the contribution margin format in 2017.
2- How many students are needed in order to achieve breakeven in 2017.
3- How many classes need to be taught in order to achieve breakeven in 2017.
4- Suppose the business wants to achieve $25,000 profit at the end of the year, calculate the number of classes is needed to achieve this in 2017.
5- Calculate the margin of safety (in number of class).There are 50 students enrolled for next years course.
6- Explain what is margin of safety
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