In 1990 the University of ABC established a Business School in Amman, Jordan under the name of Jordon Institute of Business Science. The Jordon Institute of Business Science grew quickly and has become the pre-eminent business school in the country. In addition to its academic programmes the Jordon Institute of Business Science has successfully offered programmes specifically tailored to a wide range of specialties (Custom Programmes CP) as well as public programmes (Executive Education), know as Open Programmes in MENA. The programmes are run in one of the 10 classrooms available at the Jordon Institute of Business Science. The meals are taken on campus in the Lauras restaurant which is an outsourced operation performing all the catering requirements.

The Executive Education department is headed up by Tillal El-Dhabi (MBA 2011) and consists of 10 people.

This department ensures that the 95 programmes scheduled for the year are managed appropriately.

The programme overhead (allocation) recovery rate is established by dividing the budgeted number of programmes into the budgeted total departmental costs.

Similarly, the 10 classrooms are available 7 days a week and have 4 dedicated classroom managers as well as cleaning staff. The classroom recovery rate is established by dividing the anticipated number of classroom days (across all of the Institute programmes) into the budgeted cost of classroom support.

Prof. Ray Paul resides in London, UK and is brought out by the Jordon Institute of Business Science for a 2 day public Executive Programme entitled Strategic Alliances & Partnering. He has enjoyed a good relationship with Tillal and the Institute that has lasted in excess of a decade. There is no formal contract between him and the Jordon Institute of Business Science....merely an oral agreement as a result of a phone call from Tillal 18 months prior to the seminar. He arrives 2 days before the course and leaves the day after it ends. The costs associated with this programme are as follows:

Airfare: London AMM (Business class return) JD 9000

Accommodation (4 nights) JD 150 (per night)

Lecturer daily allowance JD 30 (per day)

Car hire (for the period, all inclusive) JD 250

Advertising (Print Ads in local newspaper) JD 12000

Advertising Brochure JD 300

Lunches / teas (per delegate, per day) JD 30

Text books JD 250 each

Prof. Ray Paul fee (in total) JD 10000

Programme overhead allocation JD 5500

Classroom recovery rate JD 100 per day

The classroom allocated is classroom 1 which has a maximum capacity of 65 participants

Required:

1. If the fee charged for attendance on the programme is JD1400 per participant.

1. Calculate the break-even number of Participant and the JD value.

2. Calculate the total cost and the profit if 40 participants attend / if 60 attend.

3. Given the break-even number calculated in 1. above. What do you think the organizers would be inclined to do if they only had 12 registrations 2 weeks before the course was scheduled to run? Cancel or go ahead regardless?